Some of us have been taught to think that credit cards are bad, and I too believed that for a portion of my life. One day in high school, I was out with a friend and who told me how she used her credit and was able to purchase things as long as it was within her set budget from her father. I then decided, without telling my family, to apply for a credit card and if you know anything about my story, you know that didn’t go well. The problem was I was not educated on the subject of credit. After the mistake I made regarding my credit, I used that lesson to fuel my determination to learn more about the subject matter. After learning how to use credit the right way and how to be disciplined in my spending, credit cards have helped me boost my credit score and lending credibility. Credit cards can help improve our finances. Here are six ways they can do that.
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1. Credit cards can help us become more disciplined
We have to make a habit of paying off our credit card balances as we accumulate them. Carrying around a high credit card balance can cause us to pay more interest on the total that we owe which can translate to hundreds of dollars a month. Practicing discipline in our finances can help us to save money and also keep us on track with sticking to our budget.
2. Credit cards can help us earn cash back and rewards
Using credit cards that reward you for purchases can help us to earn cash back and rewards to redeem at hotels, for travel related purchases, and so much more. We can accumulate our rewards and cash back over time to use on family vacations or use to help offset the cost of groceries or online purchases. There’s so much that we can do with our cash back and rewards.
3. Credit cards can help us improve our credit.
One of the biggest topics of 2021 is not just how to make more money but also how to build credit. For some of us, our personal credit took a hit during the pandemic. As we look forward to returning to some kind of normalcy some of us are beginning to find ways to improve our credit scores. Credit cards are a great way to start building your credit when you need to build up your credit history and show your credit worthiness. If you are looking to build your credit please see my blog posts called “How to monitor credit for free”, “Breaking down a credit report”, and “different types of credit cards”. These posts can help with understanding credit and how it can work for you.
4. Credit cards can help with unexpected expenses.
Consider this…one afternoon you take your car to the dealership for an oil change. You wait inside the lobby for your oil change and 30 minutes later the service representative comes to you to let you know they are done. They also let you know that they found an issue and it should be addressed right away. The total you planned to spend was $68 but, the total to get the issue fixed is now $467. If you don’t have an emergency savings for expenses and don’t have enough to pay that amount with the money you have on hand, you can feel very uncomfortable. Having access to credit can help you pay for the unexpected. But just remember we have to pay off our balances at the end each month.
5. Credit cards can be used to make more money
A credit card can be a great asset when you are starting a business. Many have used credit cards to start blogs, candle businesses, lawn mowing businesses and the list goes on. An investment of $100 can create a stream of revenue that can turn into multiple streams of income eventually. Please see a certified financial expert to see if this is an option for you.
6. Credit Cards can help us scale our business.
Business credit cards can help you build business credit and show our history of paying off our debt over time. When we do this, we tell business lenders that we are good at settling our debts which may entice them to lend even more to us. Using credit cards responsibly can help us be disciplined and give us the experience we need to leverage and scale our business. When our revenue increases, we can grow our business more and eventually hire employees 😊.
Thank you for reading my post 6 ways credit cards help improve our finances. In 2021 many will be looking for ways to not only build credit but improve their finances as well. Using the ways listed above has helped me in so many ways to improve finances and be able to absorb unexpected expenses. Have you used any of the ways listed above? What are some more ways credit can help improve our finances? Please comment below and let us know. If this information can be useful to someone else, please feel free to share and if you are new to Millennial Oaks, please subscribe 😊.