All Types of Credit

by: Antoni Baran

Basic Of Credit

What is Credit?

Credit gives the ability to buy stuff without having to pay for it up front, you have to pay later.

What are the forms of credit?

Secured: With this kind of credit, the creditor guarantees that it will be paid back by putting a lien on an asset you own. Car loans, mortgages, and home equity loans are common types of secured credit.

Unsecured: When your credit is unsecured, you simply give your word to the creditor that you will repay what you borrow. Credit card, medical, and utilities bills are all examples of unsecured credit.

Revolving: If your credit is revolving, the creditor has approved you for a set amount and you can access the credit whenever you want and as often as you want. In return, you must pay the creditor at least a minimum amount on your account’s outstanding balance each month. Credit cards and home equity lines of credit are examples of revolving credit.

Installment: With installment credit, you borrow a certain amount of money for a set period of time and you repay the money by making a series of fixed or installment payments. Examples of installment credit include mortgages, car loans, and student loans

What costs and benefits are associated with credit?

  1. Convenience--Credit cards can save you time and trouble--no searching for an ATM or keeping cash on-hand.
  2. Record keeping--Credit card statements can help you track your expenses. Some cards even provide year-end summaries that really help out at tax time
  3. Instant cash--Cash advances are quick and convenient, putting cash in your hand when you need it.
  4. Build positive credit--Controlled use of a credit card can help you establish credit for the first time or rebuild credit if you've had problems in the past--as long as you stay within your means and pay your bills on time.

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

A specific formula is used to determine the score, 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.

Credit Cards

What is a credit card?

A small plastic card issued by a bank, business, etc. allowing the holder to purchase goods or services on credit.

Where can you use credit cards?

Credit cards can be used in any store that accepts it and can be used when purchasing items online.

What are the benefits and costs of using credit cards?

One of the biggest benefits is having instant cash in hand whenever you need it but one of the costs is you get into debt easily if you don't manage your spending.

Shopping for Credits

Chase Freedom Unlimited℠

  1. Annual Rate- 0% for 15 months
  2. APR- 14.24%- 23.24%
  3. Fees- $0
  4. Incentives- If you spend $500 you get $150 back in the first 3 months
BankAmericard Cash Rewards™ Credit Card

  1. Annual Rate- 0$ for 12 months
  2. APR- 13.24% - 23.24%
  3. Fees- $0
  4. Incentive- You get 1% cash back for every purchase, 2% for groceries, and 3% on gas

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

When using credit cards you have to be smart about it. One of the biggest things you should consider is if you don't have money to buy it don't buy it. Later you will have problems with returning the money back to the credit card company.