Credit Newsletter

Nick Bradley

Section 1: Basics of Credit

Credit is borrowing money but, promising to pay it back in the future. There are two main forms of credit, credit cards and personal loans. The interest or APR the consumer gets determines how much they have to pay back. When the lender is giving credit they check the consumers credit score that is on their credit report from the credit bureau to check their creditworthiness.

Section 2: Vocabulary Watch

  1. 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
  2. Capacity- Financial ability to repay a loan
  3. Creditworthiness- Trustworthiness with money as based on a person's credit history
  4. Credit Rating (Score)- A number assigned to a person that indicates to lenders their capacity to repay a loan

Section 3: Credit Cards: What You Need to Know

What is a credit card?

  • A credit card is a plastic card given to you by your bank or other companies. It gives you a certain amount of money you can barrow, know as your credit limit. When you pay back the money the amount is going to be more than you borrowed because of the cards interest rate (APR).

Where can you use a credit card?

  • You can use a credit card almost everywhere and to shop online you have to have a card to buy something.

What are the benefits and costs of using a credit card?

  • The good thing about having a credit card is being able to buy something at almost any time. There are fees that come with it though. An annual fee you're charged every year to have the card, penalty fee for things like late payments and returned payments, and over-the-limit fee for going over your credit card limit.

Section 4: Smart Consumers: Don't Fall Into the Credit Trap

When getting your first credit card you have to be careful with what you do. You shouldn't apply to every credit card you get the opportunity to. Make sure you make the minimum payment each month, and don't go over your limit. Don't think it's free money.