The Basics of Credit

Borrowing Money

Credit: The Basics

Credit is money that you borrow from the bank because you cannot have that amount of money soon. You pay off the credits in monthly payments, but the bank also charges you interest (APR) which is how they make their money. People use credits for paying for schools, houses, cars and other things like that require a large amount of money. Things like that are personal loans. The trustworthiness of a person to be given a credit is determined on his Credit History, which tells us about his job, how much he makes, and how he pays off credits. Credits can be given on small everyday things like paying for movies or groceries, with the use of Credit Cards.

Credit Cards: All You Need to Know

A credit card is a plastic card given to you by the bank, and it is used for getting small credits from the bank on everyday purchases. You can get small credits in almost any store, and the benefits are improving your credit history, and getting things that you might not have enough cash for at a given moment. Some disadvantages of this includes annual fees and Interest Rates (APR). Sometimes when you don't make it on time with a payment, you must pay the penalty fee, and when you go over your credit limit, you must pay the over-the-limit fees.

Being a Smart Consumer

When we hear so many negative things about credit cards, we are often discouraged in using them. The truth is, they are great things if you are a smart and responsible person with them. Here are some basic tips when using a credit card:

  • Always pay your bill on time
  • Don't overpay too much
  • Make purchases you know you will be able to pay off
  • Be sure to know your interest rates
  • Don't get into too much debt
  • You don't need everything!