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SAN JOSE, Calif.–(BUSINESS WIRE)– Across the country, many consumers are grappling with the financial impacts of inflation. In June 2022, inflation rose to 9.1%. The increase marks a new 40-year high for inflation, something the United States has not seen since the early 1980s.
Rising costs can put a strain on many household budget. As a result, individuals and families are often looking for ways to save money and counter the higher prices they pay across the board.
If you’re looking for ways to fight inflation in your own budget, there are plenty of options to research. Strategies like decrease spending, work from homestarting a side hustleand even try minimalism could all be good starting points.
However, there is another approach you might also consider. If you have a good FICO® score, here are some ways to use it to your advantage, starting with myFICO.
For more information on loans and credit, visit the myFICO blog at https://www.myfico.com/credit-education/blog.
1. Take advantage of lower interest rates
A good FICO® score has the potential to help you qualify for lower interest rates when you borrow money. Whether you’re taking out a personal loan, mortgage, or opening a credit card account, the lender will likely look at your FICO score when evaluating your application for financing.
The interest rate you pay to a lender or credit card issuer can have a big impact on the overall cost of financing. You might even be able to save thousands or tens of thousands of dollars if you work to improve your FICO® score before applying for a big loan like a mortgage or car loan.
Tip: It’s easy to estimate the potential savings on loans that a good FICO® score could unlock. Check myFICO Loan Savings Calculator to do the calculations on your own.
2. Refinance high-rate debt
Paying high interest rates can make it harder to manage your budget and get out of debt. And if you owe balances on accounts with revolving interest rates (like credit cards), the current state of the economy could put even more debt stress on you.
The Federal Reserve has raised the federal funds rate three times so far in 2022, and future interest rate hikes may also be on the horizon. The increases are an attempt to slow inflation. But unfortunately, when the Fed raises rates, banks often follow suit and also raise the interest rates they offer borrowers. As a result, many credit card interest rates have gone up.
If you pay high interest rates on credit cards, loans, or other types of accounts, refinancing those debts could be beneficial. With a good FICO® score, you may be able to qualify for a lower interest rate with a new lender or credit card issuer. It may also be worth trying to pay off your credit card debt in order to save money and avoid possible financial problems in the future.
You might even be eligible for a low-rate or 0% balance transfer promotion, an offer that can help you save some money temporarily. However, be sure to do your to research before transferring your balance to another card. It’s important to consider any additional costs (like balance transfer fees) and make sure the strategy is right for you before moving forward.
3. Take advantage of the rewards
Credit cards can have many benefits when you use them wisely. These handy plastic payment methods have the potential to help you establish a credit history. They also have strong fraud protections that could be to your advantage if your credit card is lost, stolen, or used for unauthorized transactions.
With a good FICO® score, you may also be eligible to open a rewards credit card. A rewards credit card may give you the opportunity to earn points, miles, or cash back on everyday (qualifying) purchases you make with your account. Depending on the credit card, you may be able to redeem these rewards for statement credits, cash deposits into your account, free travel, etc.
There are many ways credit card rewards could save you money, but it’s essential to avoid getting into debt on these accounts. If you transfer an outstanding balance from one statement to another, you’ll likely face high credit card interest charges that could cost you money and offset (or perhaps even offset) the rewards you earn using the account.
In addition, the accumulation of a balance on your credit card could push your credit utilization rate to the top. And when your credit utilization ratio increases, it can negatively impact your FICO® score.
It’s a good idea to save money whenever possible, especially when inflation and rising costs are straining your budget. Fortunately, there are several ways to try to save money, and have a good FICO® score could also open the door to other opportunities.
myFICO makes it easy to understand your credit with FICO® scores, credit reports, and 3-bureau alerts. myFICO is the consumer division of FICO – get your FICO scores from the people who do FICO scores. For more information, visit https://www.myfico.com/.