Money Myths – Part 2

Money Myths: Part 2

Every day there seems to be new advice popping up on how to manage your finances. From credit score education to consumer proposals, there is a lot of information available online. This is the second part of a five-part series on Money Myths – Cash is king.

Myth 2: Using cash or debit is the only way to go for every purchase. This way, you can never spend more than what you have.

Truth: Purchasing with cash whenever possible is great. If you have bigger financial plans, however (like buying a home or a car), purchasing only in cash will make it very difficult to secure a mortgage or a personal loan when you need it. With the average price of a home at nearly $450,000 in Canada – you would be saving for decades before being able to purchase that new home.

Credit works in several ways, but there are two areas where I’d like to focus: revolving and non-revolving credit.

Revolving credit is typically associated with credit cards and lines of credit. With revolving credit, your monthly payment can fluctuate based on how much you have spent so far.

Non-revolving credit requires you to pay a fixed monthly amount in order to pay off your total debt over a specific period of time. With revolving credit, you can also increase your payments as needed in order to close your account faster. Examples of these include student loans, mortgages, or the Refresh Secured Savings Loan.

While many people have some form of revolving credit, not everyone has a non revolving credit item reporting to their credit bureau. Yet this type of credit gives borrowers a long-term commitment item on their credit report that many banks will look at favourably when considering a major purchase such as a mortgage. By paying off a non-revolving credit item, you are demonstrating to the bank that you can make your payments on time, all the time.

Non-revolving credit is like running a marathon – it requires a lot of training, dedication, and discipline, but the feeling of reaching the finish line is incredibly rewarding.

With the Refresh Secured Savings Loan, you are not just building your credit - you are also proving to banks (and yourself!) that you can handle the responsibility of regular payments over an extended period of time. With Refresh you can reach your financial goals and build a brighter financial future.

 In our next blog, we will explore advice for managing deb and improving your credit score.