Basics of Credit

Credit Basics

The ability to obtain goods or services before payment, based on the trust that payment will be made in the future. Common forms of consumer credit include credit cards, store cards, motor finance, personal loans, consumer lines of credit and mortgages. The primary costs with credit cards are the discount fee charged by the credit card processing company. A person's eligibility of all kinds of financial endeavors determines a person's credit and it can be anywhere from 300 to 850.

Vocabulary

Grace Period- A grace period is a time past the deadline for an obligation during which a penalty that would have been imposed is waived.

Credit Limit- A credit limit is the maximum amount of credit that a financial institution or other lender will extend to a debtor for a particular line of credit.

Annual Fee- a yearly fee charged by credit grantors for the privilege of using a credit card.

Credit Cards

Credit card is a plastic card which is issued by a bank, business, etc. for the purchase of goods or services on credit. Credit card is the safe way to order or to buy something. Credit Card can be used typically everywhere like groceries, online orders, etc. You have to make sure that you don't spend your money over-the-limit, otherwise you have to pay penalty fees. Your credit card help you budget expenses each month. The use of credit card is directly connected to your credit score. Making a purchase with your credit card gives you a degree of theft protection.

Tips while using credit cards

Don't give your credit card number over the phone unless you've initiated the call. Never write your account number outside the envelope. Always save your recipients. Make a list of card numbers and their expiration dates. Carry only cards you need, especially when travelling.