[custom_frame_left][/custom_frame_left]It’s tax season again! Do you already have plans for your tax return? Are you planning on taking a vacation or buying a new television? Maybe paying some bills? What if you could use your tax return to improve your credit score?
Loan Money to Yourself
It can be difficult to build your credit score, but SECU is offering a simple, beneficial way to do it. You can use your tax return to open a certificate of deposit, or CD. CDs are like a savings account, only it provides a fixed term and fixed interest rate. When the CD reaches its maturity date, the bank releases the funds, along with any accrued interest.
So how can a CD help build your credit? If you open a CD with SECU, you can then borrow money against your CD for any reason – vacation, school, bills, etc. Then, you would pay the loan back, and the money would be returned to your CD.
There are a number of benefits to taking out a CD loan:
- As you pay the loan back, the money is returned to your CD. With a traditional loan you would simply pay the money back to the bank and no money would be returned to your account.
- Qualifying is easy and has a very low interest rate. SECU won’t need to pull a credit report to get you qualified, and your rate would always be 2.5% APY over the CD rate, which is still far below typical loan rates.
- It will help you improve your credit as the payments you make to your CD loan are reported to credit bureaus.
Here’s how it works:
Let’s say you come into SECU with $500 and open a 12 month CD. Our current rate for a 12 month CD will earn you .60%APY every quarter. Then you borrow against your 12 month CD (effectively opening a CD loan) at 2.5%APY over the .60%APY which totals 3.10%APY.
As you make payments on your loan, the principal amount goes back into your CD. When you are done paying the CD loan, the $500 is replaced in your CD and the interest is paid into the CD just as though you had the $500 in there all along.
It may sound too good to be true, but there’s no catch! It’s easy, it’s simple, and the rates are great. So bring this year’s tax refund into SECU and let us help you improve your credit!