Essential Spending - Something you need e.g. rent/mortgage/food etc.
Non - Essential Spending - Something you choose to buy e.g. CDs/games/smart phones/fashionable clothing etc.
Debit Cards - Allows you to pay for goods electronically.
- Do not have to carry money around
- Can only spend money in your account
- Risk of online fraud
- Theft of card number etc
Credit Card - Allows for spending of money which is 'loaned' to you.
- Can pay for larger more expensive items
- Can be cheaper than borrowing
- The interest can be very large e.g. for each £100 you spend, you have to pay back £120 etc.
- Temping to 'max' out on card
How you can pay for things?
- Interest free credit = You pay in instalments e.g. buying a sofa from DFS paying a certain amount each month.
- Hire Purchase = Paying for a big item e.g. a car - you pay % interest on the total amount.
- Subscription = Paying for a service every month e.g. Union rates, magazines etc.