Basics of Credit

Credit is a record of how well you have paid your bills, loans, money borrowed, etc in the past.

Forms of credit are loans, secured and unsecured, credit cards, personal and installment loans.

Some advantaged to credit is it is convenient, no need to carry large amounts of cash. Credit can help if you need money for emergencies, such as unemployment, illness, death, or property loss. Credit is also good for making purchases through the mail, telephone and internet. You can buy things that are needed now when you don't have enough to pay for them.

Some disadvantages are credit usually will cost more than paying cash. Interest and other charges may be added to purchase price. Credit ties up future income. When credit is used, you owe money that must be paid back from future income. And the most well known, is you may over buy and spend more than you can afford.

The amount of credit someone gets, or the credit limit that is set, is determined by the lender when approved for a new line of credit. it is determined by your credit score which proves your level of responsibility from your credit report and creditworthiness, and personal income which shows how much you will be able to afford, setting the limit on your credit.

Credit Cards: What You Need to Know

Credit card is a type of loan.You borrow money from your bank to make a purchase and are expected to pay the amount back in the "grace period" which is from 20-30 days depending on your bank. Penalty fees may happen if not paid on time. Each individual is subjected to a credit limit.

Credit cards are an acceptable payment almost everywhere.

Advantages of credit cards are you are able to make large purchases and pay it off in smaller portions. Your credit card statement makes budgeting easier. It is more convenient than carrying around cash. You can build up your credit score.

Some disadvantages include it being easier to dig yourself into debt if you are not careful about your spending, which may also cause an over-the-limit fee. The ease of using credit cards can cause you to overspend. And interest rates can make even a small debt seem larger over time.

Shopping for Credit

Chase Slate

Annual fee: $0

APR: 0% for 15 months. Then varies, 13.24%, 18.24%, or 23.24%

Other fees:

  • Late payment: Up to $15 if the balance is less than $100; up to $27 if the balance is $100 to less than $250; up to$37 if the balance is $250 or more.

  • Returned check: up to $37
  • Balance transfer: $0 Intro fee on transfers made within 60 days of account opening. After that: Either $5 or 5% of the amount of each transfer, whichever is greater
  • Cash advance: Either $10 or 5% of the amount of each transaction, whichever is greater.


  • paying late won't raise interest rate
  • receive monthly FICO score online


  • if you transfer your balance within 60 days of opening your account, the usual 5%- $5 balance-transfer fee will be lifted
  • reasonable interest rates


  • need excellent credit to qualify
  • no rewards program

Citi Diamond Preferred

Annual fee: $0

APR: 0% intro APR for 21 months. After that, the APR will be 12.24%-22.24% based upon your creditworthiness

Other fees:

  • Late payment: Up to $35
  • Returned check: Up to $35
  • Balance transfer: Either $5 or 3% of the amount of each transfer, whichever is greater
  • Cash advance: Either $10 or 5% of the amount of each cash advance, whichever is greater.


  • extended introductory 0% period
  • 0% period on balance transfers is longer


  • Ultra-long 0% period on purchases
  • affordable annual fee
  • travel perks


  • charges balance transfer fee of $5 or 3% (whichever is higher) when you move existing debt onto the card.

Smart Consumers: Don't Fall Into the Credit Card Trap

Tips for using credit cards wisely:

  • Pay off your balance every month
  • Use the card for needs not wants
  • Do not skip out on payments
  • Don't exceed 30% of your total credit limit
  • Keep track of your spending and how much you will owe