3 Ways Healthy Credit Can Save You Money Every Month
One of the most simple and undervalued strategies to saving money is building healthy credit. Your credit health is a key factor in having an overall healthy financial profile. Here are three ways healthy credit can save you money every month and help you reach your overall financial goals:
Interest Rates: The average interest rate on subprime auto loans (credit scores between 501-600) are 12%-18%! For consumers under a 500 credit score, auto loan interest rates are over 20%. To put this in perspective, purchasing a new car at $20,000 with a $0 down payment at an 18% interest rate would cost over $500 per month. Ultimately, costing you an extra $5000 in interest alone over the course of 60 months. That same $20,000 car with $0 down payment at a 2.99% interest rate would cost $350 per month and cost you approximately $1500 in interest over the course of 60 months. That’s approximately $150 in savings per month and over $3500 in total savings for the loan.
Insurance Rates: As referenced in a previous blog post, your credit history impacts your overall insurance premium. Although there are several other factors that impact your insurance rating, ensuring you have a healthy credit score is a proven method for saving money on your insurance costs.
Credit Card Rewards: Using credit cards for points or cash back rewards can help you save money on essential purchases such as groceries, gas, and more. In order to benefit from the best reward programs, it’s important to have a high credit score and a healthy credit profile. These points or cash back rewards can be used to subsidize future vacation costs, pay for expensive repairs, or even provide discounts at places that you frequently shop. The key is to make sure you’re getting the right credit card and using it as a tool for savings, not as a means for more debt.
As you work to build a healthy credit profile, remember that it has a greater impact than simply helping you get qualified for a loan. Having healthy credit can save you money on interest rates, insurance, and even help you get greater rewards or savings by strategically using credit cards.
For more information about building a healthy credit profile, visit our website and schedule a Free Evaluation.