Clever Credit Usage: Credit Mania

By Paige Loquercio and Kendra Martinez

The Basics of Credit

Credit is the ability to obtain goods or services before payment, based on the trust that payment will be made in the future. The Credit Card is the most common type of personal credit, they allow repeated transactions up to a certain limit which is called the credit limit.With credit cards they Lend you the money that you need, but with that also comes Interest (APR), which is interest rate charged on the amount of money borrowed. A Credit Bureau is a company that collects the credit ratings of individuals and makes them available to credit card companies, so their customers can be able to obtain a credit card. There are also many types of credit such as Personal Loans, secured loans, unsecured loans, and installment loans. If you pay all the loans back on time then over a period of time you can have a good Credit Score and it can show your Credit Worthiness to other people such as a boss, buying a house, car, etc. And in order to keep checking what your credit score is you can get a Credit Report which is a record of somebody's or a company's past borrowing and repaying when it comes to obtaining goods and repaying them in the future. Your credit and the amount you get is based on if you pay back your bills on time, how much you make, where you live, and how you manage your money.

Vocab Watch

Grace period: Additional time that issuer gives borrower to make payment on debt without penalty
Interest (APR): Interest rate charged on the amount of money borrowed
Annual Fee: Kind of membership fee; yearly fee you pay to use that card

What you need to know about credit usage

A credit card allows repeated transaction up to a maximum credit limit, which is the maximum amount a credit card company will allow you to borrow on a single card, but if you go over your limit you get charged a over-the-limit fee.Some credit cards have annual fees, which is a membership fee you pay to keep the card,but they have different interest rates so always choose the lowest APR . You can use credit cards at any store that excepts them like department stores, grocery stores, gas stations,etc. The benefits of using a credit card is you can buy now and pay for it later. Some credit cards even give you miles point, cash back, and other incentives; some of the costs of using credit cards is when you don't pay on time you get hit with a penalty fee which increases if you don't pay it on time.

Helpful Tips

Here are some ways to stay safe while using credit cards

  • Don't go over the limit
  • Use it only for emergencies
  • Always pay your bill on time
  • Never let anyone use it
  • Always take the receipts so no one can see the card numbers
  • Always make sure you get it back from the cash register
  • Keep it in a safe place
  • Never put it in your pockets