Do people need to be protected or encouraged from credit?
Basics of Credit
Creditworthiness it determined before someone gets a credit card. It uses factors like character, capacity, and capital. Places like credit bureaus collect information on people's credit and sell it to credit card companies. This is called a credit report. Credit bureaus also determine credit scores. A good credit score is between 300 and 750 and the higher the better. These factors determine if a person gets credit and how much they get.
There are some costs associated with credit like APR. The annual percentage rate is different for every credit card and is paid every year.
Capacity: The financial ability to repay loan
Character: sense of financial responsibility; dependability
What You Need to Know
When making really small purchases, using a credit card isn't a good idea because of interest. Store credit cards can only be used at the store that credit card is for. Some places of business don't take credit but most places do.
There are some costs with using credit cards. Every year there is an annual fee of about 15$- 100$. Credit cards have an interest rate anywhere from 0%- 29%. If the entire balance is paid by the due date, there is no interest. Every card has a credit limit. If the card goes over the limit, there is a penalty fee or an over the limit fee.