This article originally appeared on Mitlin Financial and has been republished here with permission.
Most people will read ” How To Make Your Money Work For You” from a financial advisor and think, “here we go, another blog about investing, 401K matching, and retirement planning.” Well, this piece has nothing to do with any of that at all.
Today, we’re going to talk about how to get your money to work for you just by what you’re spending everyday, anyway. The advice contained herein isn’t fancy or complex; it’s about getting the most out of the money you spend. There are so many perks available from so many retailers and you need to know how to benefit from them.
Grocery Store
One of the first places you can have your money go further is at the grocery store; many of the larger supermarket chains have no-cost loyalty programs. My older son recently learned that if he got a store reward card (no cost–you just provided your name and cell phone) for the supermarket that he uses through Instacart can save him money.
During a recent order, he saved $10 just for entering his loyalty number, as easy as that. The local supermarket I use gives us pennies off per gallon of gas (up to certain maximums) and given the size of my gas tank, this adds up to real money when it comes time to fill up the tank.
Related read: 5 Creative Ways Rewards Credit Cards Can Help Combat Rising Grocery Bills
Restaurants
This same philosophy also applies to many restaurants you visit. Scanning your customer number can result in perks from free food to an accumulation of points that can be used for free items as well. These rewards programs have become so popular that we are now seeing some of the old school fast food places implementing them too.
When it comes to food you can also take advantage of the holiday deals many high-end restaurants run. As an example, if your favorite restaurant has a buy $100 gift card, get $25 free; buy a gift card for you and your family and you just received a 25% perk. Nothing says the gift card has to be given away or given as a gift.
Credit Cards
Another great way to get your money to work for you are the perks associated with some credit cards; these perks offer so much I wrote a whole article about them, 5 Benefits of Credit Cards! If you pay the bill off each month and don’t carry a balance, credit cards can help your money work for you. Just be sure you have the right card and it provides you the benefits you want. The key is to make sure you are paying off the balance and not hindering your credit simply to get a few perks.
Travel
And then there’s travel…. One of the biggest things about this one is loyalty. Whether it’s a hotel chain or airline, frequenting the same company can generate rewards. In our case, though, at times, flights on our preferred airline were a bit more expensive. In the end, a first class travel photo of me was a perk from having status! It was a true testament to being recognized for our loyalty to their brand.
This article represents the opinion of Mitlin Financial Inc. It should not be construed as providing investment, legal and/or tax advice. Investing involves risk, including possible loss of principal. No strategy ensures success or protects against loss. To determine what may be appropriate for you, consult your financial advisor.
Congratulations! You’re officially an adult. Turning 18 opens a world of possibilities and freedom, but it also comes with additional responsibilities. One important responsibility to start thinking about is building your credit profile.
Credit can be a critical resource. A good credit score helps you get approved for loans and credit cards. It also helps reduce the expense associated with your debts, as you’re more likely to get approved for lower interest rates if your credit is better.
Your credit score and history can also help—or hinder—you when you’re applying for certain types of employment, a new apartment, utilities, or auto insurance. Find out more about credit and how to build credit at 18 in the guide below.
How to Start Building Credit at 18
1. Learn How Credit Works 2. Monitor Your Credit Score and Reports 3. Sign Up for ExtraCredit 4. Become an Authorized User 5. Get a Secured Credit Card 6. Apply for a Credit Builder Loan 7. Understand How Student Loans Can Help Your Credit 8. Don’t Try to Overdo It 9. Make a Budget and Stick to It
1. Learn How Credit Works
You know that knowledge is power, and understanding how to get credit and how it all works can make a big difference. Here are a few basics.
Your Credit Score
There are multiple scoring models, but they all work to provide a numerical score that tells lenders how likely you are to pay back your debts. Higher credit scores are more attractive to lenders and creditors. Five main factors influence your score:
Your Credit Report
Your credit reports are maintained by three major credit bureaus—Experian, TransUnion, and Equifax. They contain data on your current and past debts, payment history, residential history, and other information about your credit history. This data is supplied by lenders, creditors, and businesses where you have accounts. The information on these reports is fed into the credit scoring models to determine your credit score.
Here’s where it starts getting complex. The information on those reports isn’t always the same. Some businesses and lenders only report to one or two of the credit bureaus. Some don’t report to any.
So, your credit report can be a little different with each of the bureaus. That means your credit score can also vary depending on which report and scoring model is being used.
2. Monitor Your Credit Score and Reports
Once you understand some basics about credit, you should take a look at your own credit reports. Monitoring your credit is one of the best ways to learn what will positively or negatively impact your scores. It also helps you catch inaccuracies or signs of identity theft sooner. Is there an account on your report that’s not yours? It could be bringing your score down even before you learn how to start building credit! If you find inaccurate negative information on your credit report, you can challenge it.
There are a few ways to check your credit reports.
AnnualCreditReport: You can request one report per year from each of the three bureaus at AnnualCreditReport.com. The bureaus are allowing you to request your reports weekly due to the effects of coronavirus through April 2022.
Credit Report Card: You can also get information about your credit reports via the free Credit Report Card at Credit.com. This is a breakdown of how you’re doing with each of the five major factors that impact your credit score. Your personal Credit Report Card can help you understand where you might need to work to positively impact your credit.
ExtraCredit: If you’re really serious about understanding your credit reports and scores, sign up for ExtraCredit. The Track It feature lets you see 28 of your FICO® scores and credit reports from all three credit bureaus. These scores are ones that lenders look at when making approval decisions.
ExtraCredit does more than just show you your credit scores. Have you recently started paying rent or utilities? The Build It feature lets you add them as tradelines with the TransUnion and Equifax credit bureaus. That means you’ll get credit for bills you’re already paying—building your credit profile each month that you pay those bills.
This is important, because rent and utility payments don’t usually show up on credit reports. That’s simply because utility companies and landlords don’t tend to bother to report them. ExtraCredit helps you ensure you’re getting credit for those on-time payments anyway.
4. Become an Authorized User
If a friend or family member has a credit card and is an account holder in good standing—meaning they pay their bills on time—ask if they’ll add you as an authorized user. Make sure that their credit card company reports to the credit bureaus for authorized users first or this is a pointless exercise.
You don’t even need a card or to use their account. If the credit card company reports on authorized users, you’ll get their on-time payments posted to your credit reports if your friend or family member makes them.
If you’re looking for how to start building credit at 18, this can be a quick method. However, it does come with some potential risk. If that person doesn’t pay on time or runs up their credit card balance, your credit score could suffer from the negative reports too.
5. Get a Starter Credit Card
For those who want to know how to start credit building without someone else, a secured credit card might be a good place to start. Some credit card companies also offer unsecured credit cards for those with no credit. These tend to have low credit limits and may have high interest rates.
If you can’t find an unsecured credit card, though, a secured card is much easier to get in general. You have to secure it with a deposit—typically in the amount of the credit limit. For example, if you put down a $250 security deposit, your initial credit limit is $250.
You build credit by using the card and paying the bill on time each month. Make sure you opt for a credit card that reports to all three of the bureaus to maximize the benefits to your credit history. Usually after a certain number of timely payments, you get your security deposit back and may even be eligible for an increase in credit limit.
Two options you might consider are the OpenSky Secured Visa and UNITY Visa Secured card.
OpenSky® Secured Visa® Credit Card
No credit check to apply and find out instantly if you are approved
OpenSky gives everyone an opportunity to improve their credit with an 85% average approval rate for the past 5 years
Get considered for a credit line increase after 6 months, with no additional deposit required
You could be eligible for the OpenSky Gold Unsecured Card after as few as 6 months
Reports to all 3 major credit bureaus monthly, unlike a prepaid or debit card. Easy application, apply in less than 5 minutes right from your mobile device
View your FICO® Score through your OpenSky account, an easy way to stay on top of your credit
Nearly half of OpenSky cardholders who make on-time payments improve their FICO score 30+ points in the first 3 months
Your refundable* deposit, as low as $200, becomes your OpenSky Visa credit limit
Offer flexible payment due dates which allow you to choose any available due date that fits your payment schedule
*View the cardholder agreement
UNITY® Visa Secured Credit Card – The Comeback Card™
Unlike your Prepaid Card, UNITY Visa secured card can help you build your credit. Apply online in less than 5 minutes, and you could be approved today!
No Minimum Credit Score required; low fixed interest rate of 17.99%; Fully refundable FDIC security deposit* required at time of application; if you have a min of $250 to deposit immediately, you can start now!
No application fee or penalty rate
Monthly reporting to all 3 major credit bureaus
24/7 online access to your account
*See the Cardholder Agreement for more details.
6. Apply for a Credit Builder Loan
Remember that credit mix is important to your credit score. That means you can’t just have one type of credit—such as a credit card—for maximum impact. You may also want an installment loan on your account.
A credit builder loan is one way to get an installment account on your credit history. These work like a traditional loan in reverse: if you’re approved, your funds get placed in a secured certificate of deposit and are given to you after you’ve paid off the loan.
>> Read our Review of Self Credit Builder Accounts
As you pay the loan as agreed, you’ll enjoy the benefit of positive payment history building on your credit report. Once you pay off the loan, the savings account is unlocked and you gain access to the money.
7. Understand How Student Loans Can Help Your Credit
If you have a student loan in your name, you may already have an installment loan on your credit history. This is true whether your parents acted as guarantors or cosigners or not, but it’s not true if your parent simply took the loan out for you. In that case, the lender would only report on your parent’s credit history.
As with any type of debt, student loans can help you start building credit if you pay them on time. So make sure you keep up with your loan status. If you use options such as deferment—especially during COVID-19—keep an eye on your credit report. Make sure your lender doesn’t report you as paying late when you’re within an agreed-upon deferment period.
8. Don’t Try to Overdo It
Building credit is a marathon, not a 100-yard dash. While some actions can positively impact your credit quickly, as a young person you’re unlikely to have a super robust credit history in just a few months.
Take your time and don’t try to engage in every credit-building tactic at once. You certainly don’t want to max out your debt in an effort to build credit. That could leave you unable to make your payments, which tanks your credit score before you have time to really build it.
9. Make a Budget and Stick to It
Finally, make a budget and stick to it. Spend what you can afford, and don’t take on debts you can’t pay fairly easily. You have years to continue building your credit, and a history of smart decisions and timely payments is one of the best things for your score long-term.
Start Building Credit Now
Building your credit at 18 is possible. It just takes time, commitment to making smart money decisions and an understanding of how credit works.
Almost 120 million Americans pay with plastic for the perks.
More than a third (47%) of American adults say they’ve used a credit card solely to rack up rewards points, according to the latest Chasing Points study from Finder, an annual study of roughly 1,800 American adults about their credit card spending habits. That’s about 119.8 million of rewards cardholders, up 38% from the 2019 survey’s 87.1 million who admitted to the same.
Even though more adults are swiping their credit card for the points than last year, they’re spending less on average. Our study found that Americans cardholders charged an average of $1,179.36 each to take advantage of loyalty programs associated with their rewards cards, a decrease of -35% from an average of $1,814.75 last year.
However, while more people than last year appear to be pulling out plastic in the hunt for rewards, the total amount they’re spending is on the way down. Americans spent $141 billion on their credit cards for rewards, which is roughly 11% less than the $158 billion spent in the previous year, the second year in a row of a decrease in rewards spending.
What Were People Buying?
Finder’s study found that of the nearly $1,179.36 spent by American cardholders looking to earn points on their purchases, they spent the most on groceries on average ($505.01), followed by dining out ($139.48). Flights ($118.99) and hotels ($90.31) come in next, showing that American cardholders are looking for an escape despite COVID-19 restrictions.
Responses
Amount Spent% of respondents
Total spend
Groceries
$505.01
$60.5 billion
Dining out
$139.48
$16.7 billion
Flight
$118.99
$14.3 billion
Hotels
$90.31
$10.8 billion
Household items
$86.13
$10.3 billion
TV / computer purchases
$78.86
$9.4 billion
Other
$67.83
$8.1 billion
Shoes
$44.75
$5.4 billion
Cosmetics and fragrances
$27.22
$3.3 billion
Literature
$11.15
$1.3 billion
Music
$9.63
$1.2 billion
Let’s break it down
Gender
Of our respondents, men both spent more and are more likely to buy with a credit card just for the rewards. Some 51% of men say they’ve paid with plastic for points, and they’re spending an average of $1,291.88 a year on their cards, compared with 43% of women who charge at an average of $1,059.66 a year.
In 9 of 11 spending categories, men are more likely than women to spend money to get points. Women are slightly more likely than men to spend money on groceries and cosmetics/fragrances.
Responses
Men
Women
Groceries
$488.90
$522.16
Dining out
$164.09
$113.29
Flight
$157.63
$77.89
Hotels
$108.39
$71.07
Household items
$88.66
$83.44
TV / computer purchases
$106.56
$49.38
Other
$77.79
$57.23
Shoes
$50.21
$38.95
Cosmetics and fragrances
$22.74
$31.98
Literature
$13.20
$8.97
Music
$13.70
$5.30
Total
$1,291.88
$1,059.66
Generation
We all gotta eat. And across generations, groceries are the top purchase for credit card points hunters. It’s also the category in which all generations spend the most.
Generation
% that said they made a credit card purchase for points
Average spend
What they’re most likely to buy
Gen Z
47.57%
$479.89
Groceries
Millennial
49.15%
$990.95
Groceries
Gen X
51.18%
$1,170.49
Groceries
Baby Boomers
41.09%
$1,473.46
Groceries
Silent Gen
45.71%
$1,683.58
Groceries
The generation most committed to racking up loyalty points? Gen X, with 51.18% admitting to using a credit card for points, followed by millennials (49.15%) and Gen Z (47.57%).
However, baby boomers spend the most on average on rewards cards across the board, averaging $1,473.46 per person, followed by the silent gen ($1,683.58) and Gen X ($1,170.49).
Household Income
It may not shock you that the more money people have, the more likely they are to spend money on their credit cards to score loyalty rewards. 63.25% of cardholders who earn more than $120,000 say they made a credit card purchase for points, compared to only 31.81% of those making less than $20,000. However, although adults earning $120,000 or over were mostly likely to spend, cardholders with an annual income of $80,000 to $99,999 spent the most on average at $1,583.63.
Household income
% that said they made a credit card purchase for points
Average spend
Less than $20,000
31.81%
$679.14
$20,000 to $39,999
40.47%
$870.53
$40,000 to $59,999
51.13%
$1,326.52
$60,000 to $79,999
58.80%
$1,487.66
$80,000 to $99,999
53.02%
$1,583.63
$100,000 to $119,999
63.16%
$1,272.49
$120,000 or over
63.25%
$1,382.92
Are Rewards Programs Worth It?
Rewards cards can offer incredible perks. But whether they’re the right choice depends on your financial needs, spending habits and goals. Weigh the pros and cons of your rewards card, and map out how much you need to spend to reap the biggest rewards.
When looking for a card, caarefully read any limits and restrictions on how you can redeem points, and look for eligibility on bonus points at signup. The potential for travel perks, cash back and bonus points could cause you to spend more than normal, potentially resulting in high fees and interest on those purchases.
COVID-19 has changed the way many people have used their credit cards in the past year. As a result, many providers have updated their rewards structure to reflect what people are spending most on during the pandemic (such as more rewards for spending on streaming services and less for travel).
Our data is based on an online survey of 1,790 US adults born between 1928 to 2002 commissioned by Finder and conducted by Pureprofile in September 2020. Participants were paid volunteers.
We assume the participants in our survey represent the US population of 254.7 million Americans who are at least 18 years old according to the July 2019 US Census Bureau estimate. This assumption was made at the 95% confidence level with a 2.32% margin of error.
The survey asked respondents whether they have spent on a credit card because of the rewards program and, if so, how much have they spent in the past 12 months.
We define generations by birth year according to the Pew Research Center’s generational guidelines:
If you’re trying to perfect your credit score, it’s important to first understand what makes up your credit report and credit score. Your credit score is determined by an advanced algorithm which was developed by FICO and pulls the data from your credit report to determine your score. When calculating your credit score, the following information is going to affect your credit score in the corresponding percentages:
35 percent: History of on-time or late payments of credit.
30 percent: Available credit on your open credit cards
15 percent: The age of your lines of credit (old = good)
10 percent: How often you apply for new credit.
10 percent: Variable factors, such as the types of open credit lines you have
Many of this may be common sense or information that you’ve already learned over time, resulting in a good credit score but possibly not a perfect score. If you have a bad credit score, it could take a lot of time and work to increase your score and you may first want to consider repairing your credit. If your credit score is already above 700 but you’re trying to shoot for that perfect score of 850 to ensure the best deals and interest rates, here are 5 ways to perfect your credit score:
5 Ways to Get a Higher Credit Score
1. Maintaining Debt-To-Limit Ratio
To increase your credit score, it’s recommended that you keep your debt-to-credit ratio below 30% and, if possible, as low as 10%. The debt-to-limit ratio is the difference between how much you owe on a credit card versus how much your credit limit is. For example, if one of your credit cards has a credit limit of $5,000, then you should always keep the balance below $1,500 but preferably around $500. As you can see above, 30% of your credit score is determined by the available credit on your open credit cards, so keeping the debt-to-limit ratio will increase your available credit and also show that you’re responsible with your credit.
2. Keep Your Credit Cards Active
Make sure that you use your cards at least once a year to keep them shown as “active” credit and make sure that you never cancel your credit cards. 15% of your credit score is determined by the age of your lines of credit, so you should always keep your credit cards active to lengthen the age of your line of credit. Many people tend to cancel cards that they no longer use – many times because the rates aren’t very good or because they have another card with better benefits – but even if you don’t use the cards very often (just once a year is fine), you should keep them active. Typically, someone with a credit score over 800 has credit lines with at least 10 years of positive activity.
3. Always Pay Bills On Time
Probably the most well-known factor of a credit score and the factor that has the biggest impact on your credit score (35% of your score) is your history of paying your credit payments on-time. If you have a history of always making your credit card, mortgage, and car payments on time, you will greatly improve your credit score. This can also have an adverse effect as well, should you ever make a late payment. Unfortunately, it only takes one late payment to severely reduce your credit score so it’s crucial that you make sure to always make credit payments on time.
4. Dispute Errors On Your Credit Report
If you don’t already, make sure that you request a copy of your credit report once every year and review it for errors. It is actually quite common for credit reports to contain errors which can be disputed and potentially allow you to have negative items removed from your credit report. If, for instance, your credit report shows a late payment on a credit card but contained errors in the record, you can dispute the negative item and request to have it removed from your report. Having a negative item, like a late payment, removed from your report can improve your credit score significantly. While disputing errors on your credit report can be tedious and take a lot of time, it is usually worth it. Another option would be to contact a credit repair agency to help you dispute any negative items on your credit report.
5. Reduce The Number of Credit Inquiries
While this may only affect 10% of your credit score, keeping the number of credit inquiries down can still help to build that perfect credit score but is often ignored. You should never have more than one credit inquiry per year but many people do not realize how often this is done and often times have their credit checked more than once per year. If you’re applying for a car loan, checking your credit score online, or applying for a new credit card, these type of actions will almost always result in a credit inquiry and should be avoided if you’ve already had a credit inquiry earlier in the year. Make sure you do your research on what will result in a credit inquiry so that you don’t accidentally have more than one a year without realizing it.
If you have bad credit, there is a light at the end of the tunnel. Rebuilding your credit doesnât have to be hard. And, surprising to some, a credit card may be the perfect way to get started. It takes credit to build credit. Opening a new credit card and building a perfect on-time payment
The post Credit Card Reviews: Best Credit Cards for Those With No Credit appeared first on MintLife Blog.
Do people understand the benefits of a good credit score? Everyone knows your credit score is important, but what exactly are the benefits? In the United States, 28% of its citizens rely on credit when running out of money. While itâs good to use your credit, itâs not always wise to carry over a balance… Read More
The post 7 Unexpected Benefits of a Good Credit Score appeared first on Credit.com.
Before you make a major purchase, like a home or car, youâve probably put a lot of thought into the process. You might have worked to make sure your credit is in the best shape possible before you apply for a loan. Perhaps youâve shopped around and compared interest rates to make sure youâre getting… Read More
The post Hereâs How to Boost Your Credit after a Big Purchase Impacts Your Score appeared first on Credit.com.
Life insurance is essential if you want to provide for your family after your death and donât have substantial assets to leave them. Itâs something that everyone should consider when they have dependents, but if youâre over the age of 60 those insurance premiums could cost more than you can afford and more than theyâre […]
Life Insurance for Seniors: Tips on Getting the Best is a post from Pocket Your Dollars.
Authorized users are secondary account holders on anotherâs credit account. It usually benefits those that have little credit history and are looking to build it. Being an authorized user means the account is yours to use, but you wonât be listed as the primary account holder. And therefore, youâre not responsible for bill payments. However,… Read More
The post Will Becoming an Authorized User Help You Build Credit? appeared first on Credit.com.