What To Do With These Credit Tools

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You have a variety of credit tools at your disposal, but you’re not entirely sure what to buy with them. Read this simple guide to find out exactly what you should use your credit tools for and why.  

Credit Card

A credit card is a payment tool that allows users to access a set credit loan at any time. Users charge transactions to the card, which accumulate into the total balance.

As long as the balance is within the credit limit, the user can continue to add transactions to the card. These transactions are borrowed, so they must be repaid with interest.

What Can You Use It for?

A credit card is a versatile credit tool. Technically you can use it to make just about any purchase, but there are certain types of purchases that it’s ideal for. 

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Online Shopping

Use your credit card to purchase items when you’re shopping online. It’s easier to dispute a charge on a credit card than it is to dispute one on a debit card.

So, if a merchant refuses to give your money back after a bad customer experience, you can contact your credit card company to dispute the charge. They will simplify the stressful process.

Your credit card will also offer more protection against financial fraud. So, if you get scammed by a shady business, and they use your credit card information, you will have 0% fraud liability over the unauthorized transactions. 

Booking Flights

Use it to book your airline tickets to your destination. Your credit card may come with travel insurance. This travel insurance will give you coverage for airline trouble like delayed flights, cancelled flights and delayed luggage.

Booking Hotels

Most hotels require that you put down a daily deposit to guarantee that you will pay additional fees upon checkout.

Using your credit card for this temporary deposit will be much easier than using funds from your checking account—especially since you will have to wait several business days to access the funds after they’ve been transferred back into your checking account.

Buying Electronics

Some credit cards offer extended warranties for electronics. As long as you use the credit to purchase the electronic device, you can increase the coverage of the original manufacturer’s warranty. 

Balance Transfer Credit Card 

A balance transfer credit card is a type of credit card that waives interest charges temporarily. The interest charges could be waived for a period of six months or longer. This gives users a chance to pay down the principal balance without having to worry about compounding interest.

What Can You Use It for?

Balance transfer credit cards are meant for credit debt repayment. If you have a steep balance on a credit card with a high-interest rate, you could use a balance transfer credit card to help you pay it down.

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You would transfer that steep balance onto this new card, and then you would take advantage of the interest-free period to tackle the debt load.

Personal Line Of Credit 

A personal line of credit is a type of revolving credit. You are given a set amount of credit that you can borrow from. When you’d like to borrow from the line of credit, you can request a withdrawal as long as it’s within the limit. When that request is approved, you will have access to those funds. 

After making a withdrawal, you will need to focus on a repayment process. Similar to a credit card, once that credit is restored, you’re free to use it again.

What Can You Use It for?

A personal line of credit is ideally used for emergency expenses. When you don’t have enough savings to manage an emergency expense, you can turn to your personal line of credit as a backup plan.

Make a withdrawal from the account and use those borrowed funds to cover that expense as soon as possible. 

What if you don’t have a personal line of credit? You can look into personal loans online and see whether you qualify for a line of credit loan. If you do, you can apply and see whether you get approved for one.

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Home Equity Line Of Credit (HELOC)

A HELOC is a line of credit that is specifically available to homeowners. With this credit tool, you can borrow against the equity in your house.

In the same vein as a personal line of credit, you can make withdrawals from the account as long as it’s within the credit limit. Then, you will focus on repayment. 

What Can You Use It for?

One of the best things to use your HELOC for is home renovations. Your HELOC will give you a large amount of credit to borrow from, which will let you afford certain renovations that could normally be out of reach.

Paying for renovations will also let you increase the value of your household, which results in more home equity. Don’t use these credit tools for anything and everything. Use them for the right purposes. 

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