6 Ways Debt Can Be Used to Your Advantage

Debt gets a bad reputation due to the fact that it tends to cause plenty of financial troubles for the people who are in it. However, if debt is managed well then it can be used as a tool that will allow you to make big purchases that you wouldn’t have been able to afford otherwise. For instance, most people can’t buy a house without borrowing some amount of money. Additionally, debt can be a very useful investment planning tool, as you can borrow money to purchase income-producing growth assets like shares or property in order to increase your long-term wealth. Here are six ways debt can be used to your advantage.


1.  Utilize Your Debt in Order to Increase Good Credit

We live in a society where having credit is often necessary in order to function financially. Having a good credit score is needed in order to get good terms on loans, be accepted for a mortgage and credit scores are even checked by employers on occasion. However, the only means of building credit is to utilize debt. This means that you must either take a loan out or make use of a credit card. To build good credit you must repay the debt before it starts accumulating too much interest.


2.  Reap The Benefits of Financing

Instead of needing to save a substantial amount of money over a long period of time, with debt you can utilize the item that you want as you work to pay it off. Once the item is fully paid off, you will have already enjoyed using it for some time. This comes in handy when you require an item right away, but don’t have the financing to pay it off in full, such as if you need a car or kitchen appliances.


3.  Take Advantage of Credit Card Bonuses

Using credit cards that award you great bonuses, such as Frequent Flier Miles or points that can be used to redeem items is a great way to benefit from using debt. In order to reap the benefits of credit card bonuses save up for a certain item and then purchase it using your credit card. This way you can quickly pay off your credit card bill without accumulating interest while still taking advantage of credit card bonuses. This allows you to pay the same amount of money for the item as you would if you were paying in cash, and allows you to redeem the reward as well.


4.  Pay For Schooling

While winning a huge scholarship or receiving a grant is the more ideal way of paying for your schooling, sometimes this just isn’t possible. Luckily, student loans can allow you to attend the school of your choosing without paying tuition until after you graduate. On top of this, student loans are actually considered a good type of debt due to the fact that attending a college or university in order to get a higher-paying and better job down the road will allow you to accumulate more wealth in the long run. In this way you can think of your student loans as an investment.


5.  Allows You to Leave Interest Alone

If you have a substantial amount of money that is placed in a bank account, CD, or another place of investment then using a credit card in order to buy the things you need can be a good way to ensure that you leave the money that’s earning you interest alone. However, when using credit cards ensure that you’re paying the full amount back so that you don’t start accruing interest on it.


6.  Take Advantage of How Convenient Debt Is

Debt is an extremely convenient way to make purchases, as typically all you need to do is swipe a credit card in order to get your hands on the item that you want without needing to put money down for it right away. Virtually every store will accept credit cards, while on the other hand many places these days won’t accept a personal check, however as long as you’re using debt smartly this won’t have any affect on you. You can also use credit cards when you travel abroad and the currency will be converted for you.



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