What is credit? Credit is the ability to borrow money from the government or bank with a promise of future repayment. One gets approved for credit and how much based on their previous credit reports provided by the Credit Bureau. The cost that is associated with credit is interest. Interest is a percentage that is added on top of the money one will owe. The higher the interest rate and how long of a time gap the person has to pay the greater the amount will be at the end. Credit is not just associated with credit cards but also with larger personal loans such as student loans, loans to purchase a new home or car, and to items such as TVs.
Terms To Know
- Annual Percentage Rate (APR)- the interest rate that will be at the end of the year,
- Capital- goods that are used in services or making of other goods
- Collateral- property that will ensure the lender a repayment of a loan.
- Credit Rating- evaluation of a credit agency that determines is the person will be able to make on-time payments.
Credit Cards: What You Need to Know
A credit card is given from a bank or business to purchase goods with credit. Initiating you’ll pay everything back. You may use credit cards anywhere they are
● What are the benefits and costs of using credit cards?Benefits are receiving cash back, airline miles, and points. Costs include paying everything back in full, interest rates, annual fees, late fees, penalty fees, and going over the limit.