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It’s that time of year. The 2024 tax season officially kicks off on January 29, 2024, meaning the Internal Revenue Service (IRS) is ready to process 2023 tax returns. While filing taxes might not be the most thrilling mission, there's a silver lining: the potential to receive a tax refund. Your tax refund is a strategic opportunity to fortify your finances, and one powerful tactic involves building your credit score. In this article, we'll explore the best strategy to kickstart building your credit score with your tax return: secured credit cards. But first, let's cover the fundamentals.
Essentially, your credit score is a financial report card that lenders, landlords, and employers use to measure how financially reliable you are. The higher your credit score, the stronger your financial position. If you ever want to borrow money with a loan or get a credit card with great perks, lenders look at your score to determine your trustworthiness in repaying. A stellar credit score increases your chances of approval and could even land you lower interest rates, saving you money in the long run. Also, the influence of your score extends beyond borrowing—it can impact securing a place to live, landing certain jobs, or even setting up utilities without hefty upfront costs. Ultimately, maintaining a good credit score helps you access better financial opportunities in the future.
In the realm of finances, secured credit cards function similarly to their conventional counterparts, but with a calculated edge. Secured credit cards require a refundable security deposit, which becomes your credit limit. For example, making a $500 deposit creates a $500 line of credit. This deposit serves as collateral that safeguards both you and the card issuer in case you miss any payments. Ultimately, if you use the card and consistently meet the payment deadlines, you create a track record with battle-tested payment history. In the end, this boosts your credit score over time.
If you're aiming to strengthen or kickstart your credit journey, think about utilizing your tax refund as the required deposit for a secured credit card. It's an effective way to jumpstart credit building. To put things into perspective, last year the IRS reported that the average tax return for 2022 amounted to $2,753. That’s a considerable amount for upgrading your financial standing!
This tax season, give your credit score a boost with Armed Forces Bank's Credit Builder Secured Visa® Credit Card—an essential tool for those on the path to improving their credit. Customize your credit journey by setting your own limit, ranging from $300 to $3,000, based on the deposit into your Credit Builder Savings account. In addition, you can enhance your credit potential by adding funds in increments of $50 or more, ensuring your credit gets the attention it deserves.
Features of Armed Forces Bank’s Credit Builder include:
Subject to credit approval. Improved credit score is not guaranteed. Credit score is determined by credit reporting agencies based on multiple factors, but satisfactory performance on a credit card product can improve your credit score. Default on a credit card, including missed or late payments can damage your credit score. Once added, funds cannot be withdrawn from the Credit Builder Savings account and the Credit Builder credit card without closing the savings account and the credit card.