Credit
The ins and outs of the credit world
The Basics of Credit
- Credit is when a person is able to obtain goods or services before payment will be made in the future. Or a loan to pay the bank back.
- Some forms of credit are credit cards, student loans, house loans, car payments, etc.
- Some costs associated with credit are more expensive items that you do not have the money for immediately like a wedding ring, house, college, or a car.
- A persons Credit History determines if they get credit and how much.
- Credit- A loan from the bank you are expected to pay back
- Credit Score- a number assigned to a person that shows lenders their capacity to repay a loan.
- Credit Bureau- a company that collects info relating to the credit ratings of a person and shows them to credit card companies
- Credit Reports- shows a persons borrowing and payment info
- Creditworthiness- determines if a person is responsible enough to get credit
- Interest(APR)- annual or annualized percentage rate of interest on loans or credit
- Lender- the person lending out the money or loan
- Credit Cards- Gives someone a card to use credit on the go or online
- Personal Loans- loans for you to do things to help yourself
Vocabulary Watch
- Capital- all the values of what you own
- Character- how you are with paying off your loans and debts
- Collateral- Financial responsibility, makes sure you can take care of yourself with a job
Credit Cards: What you need to know
A credit card is a card that allows you to purchase goods or services on credit. You can use them mostly anywhere. The benefit of a credit card is that it helps you pay off large payments that you don't have the money for at the exact moment in time. But in the end you always have to pay them back, plus the interest.
Vocab
- Annual Fees- a charge that you pay once a year to your credit card company
- Credit Limit- maximum amount of credit that a person can use
- interest Rate- the percentage of a sum of money charged for its use
Vocab
4. Penalty Fees- when you are charged for
something extra like late fees or overtime fees
5. Over-the-limit fee- when you go over the
credit limit and have to pay a fee
Smart Consumers: Don't fall into credit card trap
- Don't use it too much
- Use for emergencies only
- Research and pick a good credit card for you
- Keep up on any fees or payments
- Don't ignore notices
- Create plans and budgets for yourself to follow
By:
Emily Reed