How To Leverage Your Debt & Credit Strategically
Debt often carries a negative connotation, but when managed wisely, it can be a powerful financial tool. Whether it’s earning rewards on credit card spending, maintaining and building a strong credit history, or optimizing your financial resources, leveraging debt in a strategic way can help you build wealth and improve your financial life. Here’s how you can make the most of debt:
1. Use Credit Cards for Rewards and Perks
Instead of using a debit card for everyday purchases, a rewards credit card can be a smarter choice—provided you pay off the balance in full each month and are not spending more than you can pay. Many credit cards offer cash back, travel points, or other perks that can add up over time and apply to your goals and spending trends. If you’re making necessary purchases anyway, why not earn something in return? The key is to spend within your means and never carry a balance that accrues high-interest charges.
2. Maintain Credit History Instead of Closing Accounts
Closing a credit card can negatively impact your credit score by reducing your overall available credit and shortening your credit history. Instead of canceling a card, consider downgrading it to a no-fee version if you’re looking to cut costs or stop using that particular card. This allows you to keep the account open and maintain a positive credit history without paying an annual fee.
3. Use 0% Interest Promotions Wisely
Many credit cards and retailers offer 0% interest financing for a set period. If you need to make a significant purchase, such as a home appliance or furniture, using a 0% APR promotion while they’re still around, can be a smart move—assuming you can pay it off before the promotional period ends. This allows you to spread out payments without incurring interest, freeing up cash for other uses.
4. Use Credit Responsibly to Build a Strong Credit Score
A strong credit score can save you thousands over time by securing lower interest rates on loans and credit lines. The best way to maintain or improve your score is by making on-time payments, keeping credit utilization low (typically under 30% of your available credit), and managing a mix of credit types responsibly.
Debt is neither good nor bad—it’s how you use it that matters. If you strategically leverage your credit cards, maintain a healthy credit profile, and take advantage of smart borrowing opportunities, you can turn debt into a financial asset rather than just a liability. Remember to only use your credit card if you can truly afford the purchases, and do not let your debt accrue by using a credit card rather than a debit card. The key is always to have a plan, stick to your budget, and ensure that any borrowed money serves a purpose that aligns with your long-term financial goals. If you have any questions on the best ways to leverage your debt or maximize credit card rewards, email info@shermanwealth.com or schedule a complimentary intro call here.