Credit Newsletter

By: Zendi Venegas Consumer Education P. 9

What is credit?

The ability to borrow money in return to for a promise of future repayment is called credit. There are many forms of credit, but the most common are credit cards and personal loans. When a person opens a credit card account, they must also pay an interest or an APR rate. The credit bureau gives a person his or her credit report which determines a person's creditworthiness. Once a person has their credit score, they will have an idea of how much money a lender is willing to give them.
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Credit Cards: What you need to know

A credit card is similar to an ATM card. A credit card allows a person to borrow money that is not theirs and use it to purchase goods or services. The use of a credit card comes with many fees. Some of these fees include an annual fee, penalty fees, interest or APR rates, and over the limit fees. Though a credit card is extremely convenient and useful, every card has a credit limit, and it is important to stay within this limit to avoid other possible unnecessary fees or charges.
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A Smart Consumer

When using a credit card, a person has to be extremely careful. There are many people who will try to steal a person's credit card number in order to buy things that are expensive. Therefore a person should never share his or her credit card information. Credit cards also are easy to lose, so every person with a credit card should make sure it is in a safe place. Another important tip to keep in mind is to only use a credit card in an emergency situation or when a person has to make an important purchase. This keeps a person's monthly credit card bill low without having to worry about interest rates for a long period of time. Lastly, placing a low limit on a credit card will keep a person from spending too much but still be able to pay that amount within 30 days.
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