Credits

Importance of credit card, credit loan, APR, credit report

Basics of Credit

Credit - The ability of a customer to obtain goods or services before payment, based on the trust that payment will be made in the future.


Different forms of credit.

  • Credit Card
  • Credit Score
  • Credit Report


CREDIT CARDS ARE NOT FREE MONEY

Requires interest and the promise to pay back the money used.


Not everyone is able to get credit cards. Determined by the following:

  • Character - Creditworthiness. Sees whether you are trustworthy. Could you be trusted with money?
  • Capacity - Do you have enough income? Will you pay back the money you owe?
  • Capital - How much debt to you owe? Have you payed it all and on time?


Vocabulary Watch!

  • Credit Score - Number assigned to you looking at your history, the bills you have paid, the debt you owe, determines whether you get a loan or not.
  • Credit Bureau - A private firm that maintains consumer credit data files and provides credit information to authorized users for a fee.
  • Credit Report - Should be checked once a year. Analysis of a person's credit standing during the collections process.
  • Interest (APR) - Annual Percentage Rate on loans or credit. Varies over time and if late than interest raised.
  • Lender - An organization or person that lends money
  • Personal Loans - A loan that establishes consumer credit that is granted for personal use; usually unsecured and based on the borrower's integrity and ability to pay

Credit Cards: What you need to know.

Credit Card

  • A small plastic card issued to users as a system of payment. It allows its holder to buy goods and services based on the holder's promise to pay for these goods and services later.
  • Could be used to purchase goods and services from merchandise.
  • Benefits - Builds credit history so loan could be offered. Money used is protected.
  • Costs - APR, an interest, needs to be paid. The rates varies. Some banks have Annual Fees to be paid for the benefit to use the card. There is a credit limit of how much could be spent. Penalty fees issued if balance not paid on time. Over-the-limit fee is charged when you exceed your credit limit through purchases, fees, or finance charges.


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

Tips for safe use of credit cards.

  • Sign card
  • Never share password
  • Always use a secured browser
  • Do no do bank stuff in wireless cafe
  • Pay more than minimum balance
  • Only use it for necessity
  • Keep track of what you charge
  • Always pay on time
  • Check credit score every year