If you’re one of millions of Americans who received a tax return this year you may be tempted to spend your return, but there are lots of other ways to use your tax return for your long-term financial benefit. One thing you can do is build better credit or start building your credit. I’ll share how to do use your tax return to build credit.
Who will want to build credit with their tax return?
If you have no credit this is a great place to start.
If you have little credit this is a way for you to help build better credit.
If your credit score is low from past mistakes this will allow you to help boost your score and rebuild better credit.
How much money do you need?
You don’t need much cash to get started. If you have your tax return money or can set aside a few hundred dollars you can get started using this method to help you build credit.
How To Use Your Tax Return To Build Credit
Apply for a secured credit card like the Discover it® Secured Credit Card. This type of card relies on funds you attach to the card to help you build credit, and your credit line will never be more than you’ve secured with the credit card company. This will allow you to both build credit and not go into debt, so it’s a win-win for you.
How does it work?
Over time it will help you build a better credit score by using the card to pay regular monthly bills or other expenses. A secured credit card can help consumers build a credit score within about nine months. But be sure you look for a card that reports to all the major credit bureaus like Discover does.
Your deposit equals your credit limit on the card, so a tax return or a small deposit is a great way to begin building or rebuilding your credit without it affecting your bank account.
Why use a secured credit card?
Using the Discover card you can get the full suite of Discover card benefits on top of having the benefit of a credit card. With the Discover it Secured Credit Card you get 2% cash back at gas stations and restaurants and you’ll also get 1% on other purchases.
Some other benefits of the card include:
- No annual fee
- FICO® Credit Score with every monthly statement
- No late fee on your first late payment, and no increase to your APR if you pay late
- Freeze ItSM – an on/off switch on the Discover mobile app or website to prevent new purchases on lost or stolen cards
- $0 Fraud Liability Guarantee
How do you transform a secured credit card into a regular credit card?
Depending on the credit card you use it’s likely you’ll have the option to move to a regular card after you’ve used it for a while. For instance, after a year Discover will reevaluate your credit status to see if you’re eligible to graduate to a Discover account without a security deposit.
While a secured credit card may not be necessary for everyone, it’s a great way to build, rebuild, or start building your credit or improving your credit score.
Disclosure: This post is sponsored by Discover as part of the Discover Preferred Blogger Network