Guidelines to staying out of debt
What is credit ?
Credit is a tool to help you, as an individual, buy something now, and pay for it later.
- simple interest - quick way to calculate the interest charge on a loan.
- rate - what you will be charged.
- principal - what the items costs without interest.
Advantages / Disadvantages of Using a Credit Card
- easy convenience
- good for record keeping
- purchase protection
- instant cash
- charges fees
- may cause overspending
- teaser rates
- paper work
- deepening your debt
Types of Loans
- conventional - mortgage loan not secured by the government.
- secured - the borrow pledges their assets as collateral.
- unsecured - issued by credit worthiness.
- installment - repaid over time on a set schedule.
- close ended - must be paid in full by deadline.
- payday - small loan lent at a high interest rate before paycheck (avoid)
ALL LOANS HAVE INTEREST !
- a schedule detailing each periodic payment on a amortizing loan.