Simple ideas and knowledge of credit
Section 1: The Basics of Credit
What is credit?
Credit is basically money you don't have now which you can use now, but you have to pay it back later.
What are the forms of credit?
Credit cards are the prime example for a form of credit, lenders and personal loans are also forms of credit.
What costs are associated with credit?
Some costs that come with credit are Interest (APR), an annual fee, and credit limits.
What determines if someone gets credit and how much they get?
When you want to buy a big purchase item, the company you are buying from will contact the credit bureau pull up your credit report, which contains your credit score, which will determine your credit worthiness.
Section 2: Vocabulary Watch
Credit score: ranging from 300-850, it is a factor in determining your credit worthiness.
Credit Worthiness: Whether you will be able to receive a loan or a purchase, depending on your capital, character, and capacity.
Annual Fees: A certain amount of money you have to pay yearly.
Credit limits: When you can only spend a certain amount of money with credit.
Section 3: Credit Cards: What You Need to Know
What is a credit card?
A credit card is a piece of plastic used to "buy now" and "pay later.
Where can you use credit cards?
Usually you can use credit cards at department stores, restaurants, gas stations, grocery stores etc.
What are the benefits and costs of using credit cards?
Well the major benefit of having a credit card, is you get what you want now, but you still have to pay later.
Some of the costs are;
● Annual Fees
● Credit Limit
● Interest Rate (APR)
● Penalty Fees
● Over-the-limit fee
Section 4: Smart Consumers: Don’t Fall Into the Credit Card Trap
- Don't open multiple credit card accounts.
- Try not to pay the minimum balance, the amount accumulates, it doesn't go away.
- Pay everything on time.