Section 1: The Basics of Credit
What is credit?
- Credit is the ability to borrow money for a promise of future payment. Creditworthiness is used to get credit.
What are the forms of credit?
- Credit cards and personal loans are the two forms of credit.
What costs are associated with credit?
- You have to pay an interest fee which is an annual percentage rate every month.
What determines if someone gets credit and how much they get?
- A Credit Bureau gives the consumer a credit report. If on your credit report your credit score is good, then it is decided how much credit you get. The lender judging you uses the three C's which are character, capital, and capacity.
Section 2: Vocabulary Watch
Section 3: Credit Cards: What You Need to Know
What is a credit card?
- A credit card is a card given to you with borrowed money on it. It has an interest rate every month added on.
Where can you use credit cards?
- You can use a credit card almost anywhere but you need to keep in mind there are annual fees every month and penalty fees if you exceed your amount or do not pay it back by the time period given to you.
What are the benefits and costs of using credit cards?
- The benefits of a credit card are you can buy what you want at any time but there is a credit limit. The costs of using credit cards is there is an over-the-limit fee when you exceed the maximum amount given to you on that card.