Christmas presents

We all know what time of year it is when the halls are decked with snowflakes and radiant lights. Children line up around the world to sit on Santa’s lap just to let him know what toys they want. Every year they get a little taller, a little heavier, and a little more expensive to please. Once they reach adulthood the toys decrease in number but the values seem to skyrocket. In a lifetime ones number ones gift on a wish list can go from a GI Joe doll to a Maserati. That’s where buying on credit comes in.

Whether your child wants a Barbie doll, the newest skateboard, or your “grownup” child wants a new circular saw you can say yes, despite a groaning economy. Nothing is worse than coal in a stocking to a child aside from maybe clothes. Don’t be that relative. Whether it’s a birthday, Christmas, or a get-well gift think back to your childhood. Provide them with a catalog and a sharpie marker and they will show you exactly what they want.

What they want can cost you nothing today. When you buy on credit you are essentially taking out a little loan. The creditors, or people that gave you the credit card/loan, pay for the item up front and allow you to pay them back over time. As a dollar is worth more today than it will be tomorrow with inflation and opportunity cost you will also pay interest on the loan.

Interest is a percentage of a loan charged at different periods (monthly, quarterly, semi-annually, yearly, etc.) to make it worthwhile for the creditors to be in the business of providing loans. This allows consumers to make purchases when they need to but don’t necessarily have the money quite yet. Creditors are given an investment usually slightly more profitable than putting money into a savings account. This way everybody wins.

If consumers weren’t allowed to buy on credit or take loans the economy would likely come to a halt. The idea of buying on credit is what allows the UK’s GDP to be roughly 70% based on consumption. Credit is what starts new businesses. Credit is what allows Richard Branson to beat inflation. It’s what allows a young couple to purchase a house. It allows grandma to buy all of the wonderful infomercial products with just a phone call. If you start today with a little gift here and there it could do all of this and more for you as well.

There are a few different things taken into consideration when a creditor allows someone to buy on credit or take out a loan. The size and severity of the loan depend on your credit history, payment history, and length of credit. There are other factors taken into consideration but these are some of the biggest.

If you’re looking for clothing for women or children this christmas then take a look at Very.co.uk, who have some great buy now pay later offers. The length of credit history is huge. Basically, the longer you have been buying on credit the more trustworthy the bank considers you. This leads to lower interest rates and higher loan/credit amounts. As the other two items imply, you still have to make timely payments and not exceed your budget.

What this all means is the earlier you start buying on credit the better your credit score is going to be. The better your credit score, the lower interest rates and higher principal amount can be borrowed. The lower interest rate means less cost to you. All of this applies not only to buying Barbie dolls, but also to the bigger toys in the future such as a house, a piece of land, or even a Maserati.

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