by: Michal Liszka

What is Credit

Credit is borrowed money that you can use to purchase goods and services when you need them. You get credit from a credit lender, whom you agree to pay back the amount you spent, plus applicable finance charges, at an agreed-upon time.

Forms of Credit

It can be a credit card or a personal loan. Where credit card is used for smaller purchases like vacation or a new peace of furniture. Personal loan is borrowed to purchase a property, car or school tuition. In order to use your credit card you will have to pay interest(APR) unless you pay the full amount at the end of the month.

Costs Associated with Credit

Coast can depend on a card you choose there are many credit card that don't have any fees. If they do they should be under 100 dollars per year. Unless you don't pay your bill on time you will be charged late fees.

What determines if someone gets credit and how much they get

What determines your credit is a credit bureau that runs your credit report to see how good your credit score is. Your credit will be between 300-850 points. Also your creditworthiness with is a ability for you to pay back the loan you get. Its split to 3 categories character, capital and capacity. Character they look how responsible you are like for example how long you have lived in your current address. Capital is how much money you make and capacity is how many loans and expenses you have.

Vocabulary Watch

When applying for credit card always be aware of these vocabulary words. Interest (APR) this shows how much interest you will be paying if you don't pay your bill at the end of the month. Lender is another big one see who you will be borrowing you the money from if its a bank or a credit union.

Where can you use credit cards?

You can use your credit card almost anywhere, if you have a visa credit card you can use it anywhere where you see the visa sticker on their window or cash register. You can also use it on online purchases

benefits and costs of using credit cards

The benefits of credit card are that if you need something and don't have money at that time you can borrow it from a bank but then you have to pay it back the sooner the better. It also helps you build a credit history so in the future you can get a loan on a car or a property. Not always but sometimes you have a annual fee with you pay ones a year and its usually under 200 dollars. Also if you go over your credit you will be punished with a over the limit fee. Also if you forget a payment you will have a penalty fee to pay in addition to your bill.

Tips on using a Credit Card

The first tip and most important is to always pay your bill on time so you avoid penalty fees. Also remember not to go over your credit limit so you don't get punished with extra fees. Remember when using a credit card try not to spend money on things you don't need and if your buying fast food try using your cash if its possible. It will help you stay on track of your credit limit.