No doubt you find a sense of satisfaction and empowerment about looking at a credit card or credit card offers what you may never have realised before. There is no doubt that having a credit card is a positive thing – but can the benefit to your business outweigh the cost? Here we will look at the potential benefits and drawbacks of carrying a credit card.
One side benefit of having a credit card that you can use is short-term savings on your spending to no other card or type of loan. This is because, only at the most significant of financial emergencies, the credit card provider can repay your credit card debts as they are incurred. This can bring the amount you owe to a whole head with a relatively low interest rate if not paid off within three to nine months of expiry of the credit card account.
Another such benefit for a budding credit card user is the instant lending facility offered by the credit card companies. Instant lending is the practice of increasing the amount of credit that you can hold whilst making a small purchase, usually by a mere 2 to 3% interest. This has tremendous savings for the consumer and they have to wait a year or so before they are repaid – but almost never happen. The rate of interest is usually higher and of high interest to a lesser extent.
Another interesting benefit – and one that many of us would like to see recognised and appreciated more than anything else – is the chance of you being able to pay off your credit card statement at any time. This is because you can have up to five payments made at any one time, meaning that the principal goes straight to your bank account and that every payment is recorded against your bill of lading bill. This is extremely handy when all else is not so good and you are faced with a very large bill each month.
Buying A Home Can Reduce Your Debt
Buying a home, especially when you can’t pay it off before the mortgage is due, can actually be a great way to reduce your credit card debt.
If you only have a few thousand to $10,000 in available credit during each of your first seven years of owning a home, you have $29,000 more available for loans per year than you have currently standing on your investment rather than houses.
By moving away from cash, you are effectively paying back only what you have actually built – which can actually hurt your credit score greatly if you loan to someone you think you can repay. In reality, you will have to set aside an extra $20,000 or $35,000, whichever is less, depending on how much your credit card limit is.
While the best way to maximize the money saved from a new loan is to simply buy a new house – at which point you can still use the money lent – plan B to buy a home is to make the real home loan repayments and then transfer all of your equity to it in order to pay off all of your credit card balances.
What will have been the single biggest benefit of building a new home for your future husband and three kids are now two smaller ones.
It’s not always easy getting new homes, especially if you still have the debt. There are many factors that come into play when you consider the costs of financing new homes, but this single greatest benefit – the potential savings – comes in large part courtesy of the mortgage industry, and the fees you have to pay to get that savings.
The major culprits in this need to be cleaned up, but one credit card company has proven itself to be incredibly generous, and in fact has paid out over $100 million in loan guarantees over the past several years.
In essence, they simply give you short shrift on your loans, and then promptly pay you back by the grace of posting a ‘loyalty’ (which includes pre-approved mortgage applications – so to speak) on your credit card statement.
The bottom line is that your life has become a net ticking time bomb that you simply cannot handle, and no matter how much you can afford, the mortgage industry knows it. The only way out is (paying for it) with some cash that you can easily stash in your savings in order to make a little less money on the purchases you’re making in the real world, so that the gains of renting a home are offset by real losses of equity.