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We all know how important a good credit score is. It can help you when applying for a home loan or personal loan since it demonstrates to credit providers that you are a low risk candidate. They also demonstrate how financially dependable you are to anyone who is to engage in a financial agreement with you, such as landlords. As an added perk to you, a good credit score will even help to lower interest rates and your monthly premiums.
But did you know that credit cards help you to build good credit? Even a clothing store account has the potential to raise your credit score when used responsibly. Let’s find out the pros and cons of both credit cards and clothing accounts so that you can make an informed decision as to which one to choose.
Credit cards, when used responsibly, can improve your financial wellbeing, as well as act as a source of emergency savings should you really, really need it. Here are a list of benefits of owning a credit card:
Clothing accounts and store cards work in the same way as credit cards, however, generally only work at specific retailers. Sometimes retailers even partner with banks to offer these services. Clothing accounts let you purchase items today and allow you to pay them off at a later date. Unlike credit card applications, you’re generally able to get a store card as soon as you submit an application and start using it immediately in order to build credit.
Here are a few benefits of owning a store card:
When choosing to go with the clothing account route, be aware of the disadvantages of owning one.
Tips to finding the right credit card for you:
Bottomline, whether you choose a credit card or clothing account, it comes down to your personal financial status and spending behaviours. Credit cards open up more avenues to you with the ability of using it wherever they are accepted but also carry the risk of overspending. Clothing accounts may reduce the likelihood of overspending but tend to have higher interest rates than a regular credit card. Make sure you do your research before applying!
Nedbank has a range of credit cards on offer that can suit any lifestyle, to find out more and start your application, visit this link.
This information is intended for general information purposes only and does not constitute legal advice.
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