Credit Newsletter Project

By Mariel Labajos

The Basics of Credit

What is Credit?

In summary, Credit is a contractual agreement in which a borrower receives money and agrees to repay the lender at some date in the future, generally with interest (Also known as APR or Annual Percentage Rate).

What are some Forms of Credit?

  • Student/Personal Loans
  • Credit Cards
  • Secured and Unsecured Loans
  • Installment Loans

What are the Pros and Cons of Credit?


  • Convenience: No need to hold a lot of money!
  • Record Keeping: Track your expenses through a Credit Report!
  • Instant Cash: Cash Advances are quick!
  • Perks: You can receives benefits for spending!
  • Builds Positive Credit: Helps build up your Credit Score when you pay on time! Also strengthens and/or establishes your Credit Worthiness!
  • Purchase Protection: Credit Card Companies can help settle disputes for you!


  • Overuse: It's easy to spend more than what you can afford
  • Paperwork: You need to save tons of receipts and check them against your statement monthly
  • High-Cost Fees: Your purchase will be more expensive if you miss a payment
  • Deepening Your Debt: If you miss your monthly payments, your debt is going to increase by a lot
  • "Homework": You have to make sure you receive proper credit for incorrect charges
  • Unexpected Fees: Cash advances usually carry high interest rates

What determines if someone gets credit and how much they get?

A specific formula is used to determine a person's creditworthiness, and it's based on whether the person pays bills on time, how much debt he or she has, the length of his or her credit history, how many new accounts the person has, and the diversity of the credit accounts. This information is then collected by the Credit Bureau: A company that collects information relating to the credit ratings of individuals and makes it available to credit card companies, financial institutions, etc.

Credit Cards: What You Need to Know

What is a Credit Card?

A credit card is a card issued by a financial company giving the holder an option to borrow funds, usually at point of sale. Credit cards charge interest and are primarily used for short-term financing. Interest (APR) usually begins one month after a purchase is made.

Where can you use credit cards?

You can use credit cards virtually anywhere, such as:

  • Restaurants
  • Stores
  • Online stores
  • Buying Airplane Tickets
  • Gas Stations
  • Hotels
  • Buying Apps on your phone

What are the pros and cons of using credit cards?


  • Purchasing power: Credit cards give you purchasing power worldwide — locally and overseas, and online, by phone and at stores.
  • Pay later: Credit cards let you buy now and pay later.
  • Build credit: Credit cards are indispensable tools for folks trying to build credit.
  • Emergency protection: Credit Cards come in handy in case you need to buy something in an emergency.
  • Rewards: By using a credit card, you can earn money back on your day-to-day purchases. Usually they're the results of Annual Fees made by card companies. Annual Fees are the reason why rewards are available in some credit cards.


  • Interest: A high APR can drag you deeper and deeper in debt if you don’t pay off your balance quickly.
  • Late fees: Miss a payment and you’ll pay a late fee. Often, the fee is around $25-$35. This adds up quick for repeat offenders. This is a type of penalty fee for violating the terms of a cardholder agreement or any similar terms.
  • Ease of spending: Credit cards make it easy to spend money — maybe too easy. If you’re not careful, it’s easy to fall into suffocating debt. And eventually you might hit your Credit Limit, which is the maximum the company will give you on your card.
  • Other Penalty Fees: If you aren't careful with your Credit Card you can run into a myriad of other kinds of fees. For example, the Over-the-limit fee is a fee that is charged to a borrower when their balance exceeds their loan limit.

Shopping For Credit

Here, as an example, we're going to compare two credit cards based on their annual rate, APR, fees, and other factors.
  • Annual % Rate (APR): 13.34%-23.24%
  • Annual Fee: $0
  • Grace Period: 25 Days
  • Fees:

-$10 or 5% of wire transfers

-$10 or 3% for Balance Transfer

-$10 or 3% for Direct Deposit and Check Cash Advances

-3% Foreign transaction

-Late Fees: up to $37

-Return Fees: up to $27

  • Benefits:

-$100 online cash rewards bonus offer

-10% bonus every time you redeem your cashback

-1% cashback every purchase

-2% cashback in grocery stores

-3% cashback in gas stations

  • Annual % Rate (APR): 13.34%-23.24%
  • Annual Fee: $0
  • Grace Period: 23 Days
  • Fees:

-$10 or 5% of wire transfers

-$10 or 3% for Balance Transfer

-$10 or 3% for Direct Deposit and Check Cash Advances

-NO Foreign Transaction Fee

-NO Over limit Fee

-Late Fees: up to $37

**No late fee on first late payment**

-Return Fees: up to $27

  • Benefits:

-Cash Back for good grades

-”Whatever You Earn Your First Year, We Match”

-5% Cashback on categories that change each quarter

-1% Cashback on all purchases

-Get Rewards any time

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

Tips and Advice

  • Pay off your balance every month
  • Use the card for needs not wants
  • Never skip a payment
  • Use the Credit Card as a budgeting tool
  • Use a rewards card
  • Don't exceed 30% of your total credit limit

Sources Used

Thanks for reading! I hope this helped you out!