Basics of Credit
Eric Salazar______Period. 9
Section 1: The basics of Credit
What are the forms of Credit? Installment Credit
This is credit that you use to borrow money and promise to repay in equal amounts over a specific period of time.
This is credit that allows you to borrow an amount repeatedly as long as your account is in good shape. You repay the amount borrowed in full or make a partial payment that is joined with interest and fees.
This type of credit requires that all money borrowed must be repaid in full every month to the lender, usually a bank/ Credit Bureau
What costs are associated with Credit? Discounted fee charges
What determines if someone gets Credit and how much they can receive? A credit score is determined by how often and for how long the card holder pays his credit card bill on time, which is also known as their Credit Report. How much they can receive is on how well they keep track of it all, and this is their Creditworthiness; or how reliable they are. If they are responsible, they will receive more. If they are not, then they receive less or get points deducted.
Section 2: Watch out for Vocab! Coming you way.........TODAY!!!
check register- a document used to record financial transactions in cash.
safe deposit box- a fireproof metal strongbox (usually in a bank) for storing valuables
Inflation- A general increase in prices and fall in the purchasing value of money.
Setion 3: Credit Cards: What you need to know doe!!
● What is a credit card? A plastic card issued by a bank, business, etc. for the purchase of goods or services on credit which require penalty fees if not paid back.
● Where can you use credit cards? Sales, physical stores, gas stations, online, food markets, black markets (not advised), restaurants, and more!
Annual Fees are yearly fees charged by the lender for the honor to use a credit card.
● What are the benefits and costs of using credit cards?
Immediate Access: Need a new toilet? Credit can help with an expensive, unexpected emergency and give you the flexibility to pay it over time.
Security: Lose cash, and it's gone. Lose a credit card, and it can be cancelled. Also, if you report a lost or stolen card promptly, you're protected against its unauthorized use.
Convenience: Credit cards are accepted at more places than checks, and they're generally faster to use.
Rewards: Using a credit card with a rewards program may earn you benefits like free traveling.
DisadvantagesThe main disadvantage to credit cards is the cost to you in interest rates and fees. Also, some credit card companies have a Credit Limit where you can only spend so much due to you credit score and if you surpass that limit, you will recieve an Over-the-Limit fee because you are using more then you can handle to pay back.
Section 4: Don’t Fall Into the Credit Card Trap
Never bite off more then you can chew
Use the card for emergencies and little on 'wants'
Pay back your fees or else you will lose credit score, have to pay interest, and will embarrass your family to the great credit card lord from downtown, Michigan
If the credit card is lost or stolen, report it so that it is disabled and no one else can charge on it.