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How to Use Credit to Save Money!
A lot of people think that you should never use credit to save - after
all, it simply cannot be done. Ha, the fact is that you can use credit
to your benefit to help you save money and this how:
Loan
If you have a good credit rating, or if you are willing to secure a loan,
then it may be possible for you to get a loan at rates that are lower
than some types of savings schemes. For example, if you are paying 10
per cent on your borrowing, but year on year mutual funds are increasing
by 15 per cent, then it should be possibly for you to borrow the money
on the loan and use the proceeds to invest in the scheme paying a higher
rate of interest. Be careful though as it is easy to get the calculations
wrong here - so it's probably best if you speak with a financial advisor
and make sure what you are doing makes sound financial advice.
Tax
Some lending schemes give you a tax break. An example, if you have a mortgage
and you are just about to make the last repayment on your mortgage then
you could be about to lose any tax deductions you may be entitled to.
However, rather than paying your hard earned money to the government,
why not think about refinancing your home mortgage, thereby continuing
your tax exemptions, and then using the proceeds to use in a tax free
savings scheme. The tax you save on your refinanced home loan, plus the
gross returns you get on your savings could well end up being higher than
any interest you have to pay on your refinanced mortgage loan.
Credit cards
Credit cards are only a bad financial tool if you don't make full repayment
of your statement balance each payment period. However, if you do make
repayment of your monthly bill in full each month a credit card can be
a fantastic credit tool to use to help you save you money, as, at minimum,
you'll get 28 days credit free use on your money. If you then keep the
money you use to pay your credit card in a savings account, you can then
earn interest on this money over the credit free period the credit card
is giving you to help you earn that little extra bit of savings! |
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