5 Ways Debt Can Actually Help You

No one enjoys being weighted down by a heavy debt load. Debt is often discussed is a negative light, and conventional wisdom tells us to stay away from debt and get out from under it as fast as you can, but are there any benefits to have some debt? The answer is yes, here a list of 5 ways debt can actually help you!

1. It Can Build Your Credit History

- Without some form of debt, you cannot establish a credit history. The act of being approved for a credit card isn’t enough because, in order to have something applied to your score, you need to use your card. Using your credit will establish what kind of borrower you are.

2. Increased Debt Mix Can Improve Your Score

- Being able to manage a credit card is great for your score, but what’s even better is managing multiple forms of credit. A healthy mix of installment credit and revolving credit is the best way to build and establish your credit score.

3. Investment

- The most common way people use debt as an investment is when they buy a home. Real estate is an investment which is almost guaranteed to appreciate in value. This means that accumulating debt in order to purchase real estate will usually work in your favor - provided, of course, you keep that debt in good standing.

4. Debt When Interest Rates Are Low

- When interest rates are low, it can be smarter to take on debt when you need a chunk of money instead of withdrawing from your savings. Your savings might be earning you more in interest than what you'd be paying on the debt.

5. Rewards

- Many forms of debt, most commonly credit cards, come with rewards. As you know, there are credit cards that offer reward mile for travel, some that offer points at your favorite store and others that are cash back. You can come out ahead by making smart use of this sort of credit.

As you can see, debt has its upsides, and it's not all doom and gloom. Make sure not to get in over your head and to use debt with caution and discernment. Always pay it down as fast as possible and don't make late payments.

Are there any other benefits of debt? Let us know in the comments!