Access to reliable financial services is essential for a healthy and productive life. That’s because having the right financial services can help you reach your goals and make everyday life more manageable. With today’s ever-changing markets, it’s essential to have access to credit cards, personal loans, and IRAs, to name a few services, to make good decisions with your money. But how do you use each of these products to your advantage?
Debit & Credit Cards
Debit and credit cards are the closest things to introductory products that lenders offer. Debit cards come with no frills; you can use the money deposited in your account to purchase items when you don’t have cash on hand . In an increasingly cashless world, debit cards are the easiest way to make purchases.
On the other hand, credit cards allow you to make cashless purchases on items you might not yet have the money to cover. When you purchase something using a credit card, you increase your debt balance on the card. If you don’t pay off the balance each month, interest is applied to the balance until it is paid off. Paying these debts in full and on time shows lenders you’re a responsible credit user and may increase your credit score over time.
Lines of Credit
A line of credit allows someone to borrow some or all of a considerable amount of money, pre-approved by your preferred lender. There are many different types of lines of credit, including home equity lines of credit (HELOCs), securities-backed lines of credit, business lines of credit, and personal lines of credit, which can all be segmented further into either revolving or non-revolving.
Revolving lines of credit afford you multiple borrowing and repayment periods, or you can repeatedly borrow money, pay off that debt, and borrow against your line of credit again. In contrast, non-revolving lines of credit allow you to use a single borrowing and repayment period. During borrowing periods, you usually only have to pay back the interest for withdrawals made. You cannot withdraw any more funds for the repayment periods until you pay back all principal and interest owed.
Whether secured or unsecured, personal loans can quickly improve your everyday life. You can use loans for credit card consolidation, vacations, car repairs, and many more options. You can even apply for one without a credit history, depending on your choice of lender.
Loans allow you access to a significant sum of funds and give most people more favorable interest rates than credit cards or lines of credit. With only proof of identity, address, and income, you could qualify for a personal loan to help you out now and later. After all, making complete and regular payments and mixing up the types of credit you use are both methods to improve your credit score.
Investment accounts may be more helpful for achieving plans you have for the future, but there are ways to make them work for you in the short term, too. For example, a 401(k) uses pretax dollars to help fund your retirement goals and may even come with an employer match. Additionally, investing in equity or funds that offer dividends can result in receiving a percentage of their profits monthly, quarterly, or yearly. How about that for another way financial services can improve everyday life?