Credit Newsletter

Eladio C. Pd 9

The Basics of Credit

Credit is the ability to borrow money for a promise to repay later. A lender is the person or bank who offer you the credit. The types of credit that are available are credit cards and personal loans. The costs that are associated with credit are interest, which is a rate that you pay on the money you already owe. In order to see if you can get credit, you need to show your creditworthiness, which means how reliable you are to pay back. In order to see if you are reliable to receive credit the credit bureau, company who manages credit, sends a credit report, history of your credit, to the lender for a credit score, which is a number that determines your creditworthiness.
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Vocabulary Watch

Capacity- borrowers ability to repay a debt

Collateral- something that has value you can lend for money when you don't have any credit left

Overdraft- taking out more money then you have from your account

Credit Cards: What you need to know

A credit card is a card that carries money that you have to pay back. Usually with credit cards, you have a credit limit which is the maximum of amount of credit you received. You can use a credit card anywhere VISA mastercard , Discover, or American Express is accepted depending on your card. Some credit cards have an annual fee, which is a fee you pay each year just to own the card. The benefit of having a credit card is to build up your credit score in order to receive a higher credit in the future to buy a house or car. The costs of having a credit card are interest rate (APR) which is a percentage rate that you are charged throughout a year. If you do not pay on time you might be charged a penalty fee also if you go over your credit limit, how much money you are allowed to spend, you may be charged with a over-the-limit fee.
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Smart Consumers: Don’t Fall Into the Credit Card Trap

-Pay full payment if you can.

-Choose cards wisely. low interest rate/best benefits

-Avoid having too many credit cards

-Pay cash if you need to

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