Rare Occasions You Are Better Off with Credit

Most people will tell you that to achieve financial freedom, you will need to eliminate credit, and limit it as much as possible. While in general, the statement is true, there are some rare occasions when you might want to apply for a credit instead of paying in cash. No matter if you are new to credit cards or have been in trouble before, you need to read the below list of occasions when you can and should rely on debt.

Mortgages

Very few people are in the position to afford to pay for a house upfront. Your first home purchase will be likely based on a mortgage deal. You will have to get on the housing ladder, and this means taking out a mortgage and committing yourself for long decades. Unless you have inherited millions, you should use credit for buying and renovating your home, as it is an asset that is likely to maintain its value over the coming years.

Booking Holidays

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Using your credit card often allows you to get extended guarantees and protection, and if you are booking your vacation for a lifetime, it is recommended to get your card out. If anything goes wrong, or the company goes bankrupt, you have a better chance of getting your money back fast through your credit card company than doing it without them. Make sure that you pay the money back into your account before the interest and fees are added, so you avoid making your vacation more expensive.

To Consolidate

If you already have outstanding credit, you should use loans to reduce your payments. If you are asking yourself should I consolidate my credit card debt the answer is yes.  Make sure that your new deal has a fixed rate, and you have a budget in place that gives you a clear indication of when you will finally be debt free. Dealing with unmanageable payments and uncertainty can increase your stress levels and make you less focused on your long-term financial goals. Reduce your interest rates and outgoings, improve your credit rating, and consolidate your finances regularly.

For Short Term

If you would like to take advantage of a saving offered by a company, you can use your credit card or a short-term loan, provided that you are expecting to pay the money back in a few months. As an example, if you are due a bonus in April that will cover your purchase of a car that is discounted for a limited time by thousands of dollars in January, you can use credit to buy it now, and pay it off as soon as you get your lump sum payment.

For High Return Investments

There are some high return purchases that you can use credit for. As an example, it is worth to take out credit, to gain an extra qualification to improve your career and double your salary in a few months.

While you shouldn’t use credit for everyday purchases, there are a few situations when taking out a loan or paying with your credit card are preferred to paying in full by cash.