Credit
By: Ryan Langer
The Basics of Credit
A lot of people look for ways to make payments without having to pay right away. Credit, the ability to borrow money in return for future payment, will satisfy these people's needs.
Two important forms of credit are Credit Cards and Student Loans. A lot of people own credit cards. They allow people to make purchases and pay them back at the end of the month when they are due. When people fail to pay their credit card bills at the end of the month, their credit score decreases. A credit score ranges from 300 - 850 with 300 being the worst and 850 being the best. Many students need student loans. Student loans are loans that students take to pay off their college funds and tuition. They are required to pay back their loans at the end of a grace period, which is normally after their schooling.
There are always costs and benefits when choosing anything. When it comes to credit, one cost is the interest (APR). If you don't pay on the due date, there is an annual interest rate on all or a portion of the bill. Another cost is that your credit score might ruin your chances of making big purchases in the future. One benefit is that you can raise your credit score to make future purchases. Another one is that you can make purchases and not have to pay them back right away.
When determining if someone gets credit, many things come into play. The first is the Credit Bureau. This company gathers information on people's credit and sells it. They have a record of anything that has impacted their credit score. This will help some people as well as ruin some people. Another factor is someone's credit report. This report contains detailed information on someone's credit history. This report can be gathered from future lenders from the borrower's permission. This will help determine someone's credit worthiness. Credit worthiness is the amount of reliability a company has on a consumer of paying their bills on time. Throughout these factors, if someone has a good credit report then they will receive credit. If someone has a bad credit report then they will not receive credit.
Credit Factors
Credit Card
Credit Report
Credit Score
Credit Cards: What YOU Need to Know
A credit card is a card that you can use to pay for items without the money coming right out of your account. It goes under your name, and the bank that you choose trusts that you will pay the bill at the end of each month. If you don't pay your bills, you will go into debt.
You can use credit card at a store, a gas station, any place you purchase an item or goods.
There are many costs and benefits from owning a credit card. The first idea that I want to point out is Annual Fees. Annual Fees can be both a cost and a benefit depending on the bank card that you have. An annual fee is a fee that you have to pay every year for just having the card. Once again, another idea that can go both ways is a Credit Limit. A credit limit is a cap on a credit card that you can't spend past. This could be a cost because some people need to make big payments for say a car and can't because of their credit limit. On the other hand, this can be a benefit because some people spend way to much with their credit card and need the cap. An Interest Rate (APR) is a cost because this tells someone how much they have to pay if they didn't pay their bills on time. Another cost is a penalty fee because some people could accidentally violate the terms of the card and be charged extra money for something they didn't mean to do. This could also be a benefit because some people are violating the terms on purpose and deserve to pay extra fines. The last cost that I am going to talk about is the Over-The-Limit Fee. This is a cost because some people spend more than their cap on their credit card and have to pay this fee.
Shopping for Credit
Comparing Two Different Credit Cards:
Chase Freedom Unlimited
- Annual Fee = $0
- APR = 0%
- Fees = Late Payment - $15 if balance is less than $100, $27 if balance is between $100 - $250, $37 if balance is above $250. Returned Check - None. Balance transfer - $5 or 5% of the amount of each transfer. Cash Advance - $10 or 5% of the amount of each transfer.
- Incentives = 150 dollars bonus after you spend 500 dollars in your first three purchases of opening your account. Earn unlimited 1.5% cash back on every purchase. Always able to redeem for cash back.
- Advantages = Lower late payment.
- Disadvantages = Higher rewards.
Shopping for Credit
Comparing Two Different Credit Cards:
Bank of America Cash Rewards
- Annual Fee = $0
- APR = Low intro APR offer
- Fees = Late Payment - up to $37. Returned Check - up to $27. Balance Transfer - Either $10 or 3% each transaction. Cash advance - Either $10 or 3% each transaction.
- Incentives = $100 cash bonus if purchases items up to $500 in first 90 days. 1% everywhere, 2% at grocery stores, and 3% on gas. Up to $2,500 quarterly. 10% customer bonus offer.
- Advantages = I feel like a better cash bonus than Chase. Also better interest.
- Disadvantages = Higher late payment.
Don't fall into the credit card trap
1. Always make sure to pay your bill at the end of the month to get away from debt.
2. Maintain a high credit score.
3. Look for the bank that offers rewards for you.
4. Don't spend more than the credit card's cap.
Sources
https://www.bing.com/images/search?q=no%20debt&qs=n&form=QBIR&pq=no%20debt&sc=8-6&sp=-1&sk=
I used google for all of my images. I typed in key words into google and hit images to where I found my images.