Last night I fell asleep thinking about my long-term goals. Eventually I would like to own my own home and perhaps build a small real estate portfolio in order to provide yet another stream of passive income.
I’ll have to build my credit if I want to accomplish that.
I don’t like credit. Credit makes it far too tempting to overspend and the interest rates charged…well, I’m cheap.
That said, a good credit score would open doors and opportunities for me that otherwise would be closed should I decide to pursue home-ownership and real estate investments.
I’ve been discussing this fact with my beloved Auntie, who has become my financial counselor as of late. She offered a suggestion that I would like to run past you in order to hear your opinion.
Auntie pointed out that credit cards do not charge interest if you don’t carry a balance. She shared that she keeps a credit card that she uses to make her everyday purchases that she pays in full each month. This not only helps keep her credit in good standing, it provides a layer of protection in the event her card information is ever stolen, since she never uses her debit card. This keeps the money in her checking account safe.
I have no need for credit at the moment; living beneath my means the way I do means that I don’t require it. That said, I know from experience how challenging it can be when a credit card thief empties your primary bank account.
An extra layer of protection would be a nice thing to have. I am a firm believer in hedging my bets when it comes to finances and I have become extremely cautious about using my card in unfamiliar stores. I carry cash with me to avoid using my card these days as a result.
If I took Auntie’s advice I would not only gain a layer of financial protection, I would begin building my credit score. This would allow me to secure credit should I require it in the future to achieve my long-term goals. I could use the card for my everyday purchases, budgeting accordingly as I already do, then pay off the balance each month. This would allow me to avoid any interest fees. At the most, I would have to pay an annual fee on the card until I figured out a way to eliminate that.
What is your opinion? Do you think it would be a good idea to apply for a credit card and use it in this manner? Please share your thoughts in the comments below.