Credit
What is it? And why is it important?
By: Jenny Lewanczyk
What is credit?
What are forms of credit?
Types of loans: Student loans and car loans.
Credit cards- give you the amount of money you need at the moment but you have to pay back the money once a month. There are many types of credit cards that fit your needs and/or personality.
What costs and benefits are associated with credit?
Your credit score depends on your history of credit and whether or not you pay the bills on time.
Advantages- Convenience, record keeping, instant cash, perks.
Disadvantages-Overuse, High cost fees, bad credit score, Interest (APR).
What determines if someone gets credit and how much they get? Or Creditworthiness!
The credit bureau- is a company that collects information relating to the credit ratings of individuals and makes it available to credit card companies, financial institutions, etc.
credit report -contains your credit history as reported to the credit reporting agency by lenders who have extended credit to you.
Character- Are you reliable? Will you repay the debt?
Capital- What if you don't repay the debt? Do you own something valuable?
Capacity- Can you repay the debt?
What you need to know about Credit Cards!
-the ability of a customer to obtain goods or services before payment, based on the trust that the payment will be made in the future.
Where can you use credit cards?
-You can use credit cards about anywhere where they accept it. For example, grocery store, bank, online, the zoo, or even in a restaurant.
What are the benefits and costs of using credit cards?
Benefits-
Able to buy needed items now
Don't have to carry cash
Creates a record of purchases
More convenient than writing checks
Consolidates bills into one payment
Costs-
- Interest (higher cost of items) APR.
- May require additional fees such as penalty fees and Over-The-Limit Fee.
- Financial difficulties may arise
- Increased impulse buying may occur. Might go over credit limit.
Shopping for Credit!
Capital One Journey
Annual Fee: $0
APR: 20.24%
Other Fees: Penalty up to $35
Benefits: 24 hour travel assistance, extended warranty, auto rental insurance, travel accident insurance.
Discover it
Annual Fee: $0
APR: 0%
Other Fees: none
Benefits: Rewards, allow co-signer, 0% APR, If GPA is higher than 3.0 you get $20 cashback,
Tips for using credit wisely!
Establish a steady work record
Pay bills promptly. Never ever miss a payment!
Open checking account and don't bounce checks
Open savings account and make regular deposits
Apply for a local store credit card and make regular monthly payments.