Credit Newsletter

Simón Perez

The Basics

What is credit?


The ability to borrow money in return for a promise of future payment is credit. The future payment usually includes interest.


What are the forms of credit?


Credit cards and any type of loan.


What costs are associated with credit?


Payment and interest fees.


What determines if someone gets credit and how much?


Character, capacity, capital and collateral.


Important Vocabulary


Annual Percentage Rate (APR) - The yearly cost of a mortgage, including interest, mortgage insurance, and the origination fee (points), expressed as a percentage.
Capacity - The maximum amount that something can contain.
Capital - The wealth, whether in money or property, owned or employed in business by an individual, firm, corporation, etc.
Character - The distinctive nature of something.
Collateral - Something pledged as security for repayment of a loan.
Credit - The ability to obtain goods or services before payment, based on the trust that payment will be made in the future: "unlimited credit".
Credit Bureau - A company that collects the credit ratings of individuals and makes them available to credit card companies, financial institutions, etc.
Credit Card - A plastic card issued by a bank, business, etc., for the purchase of goods or services on credit.
Credit History - A record of an individual's open and fully repaid debts.
Credit Limit - A credit limit is the maximum amount of credit that a financial institution or other lender will extend to a debtor for a particular line of credit.
Credit Rating (Score) - An estimate of the ability to fulfill financial commitments, based on previous dealings.
Creditworthiness - Trustworthiness with money as based on a person's credit history; a general qualification for borrowing.

Vocabulary Watch

Credit Card - A plastic card issued by a bank, business, etc., for the purchase of goods or services on credit.


Credit - The ability to obtain goods or services before payment, based on the trust that payment will be made in the future: "unlimited credit".


Annual Percentage Rate (APR) - The yearly cost of a mortgage, including interest, mortgage insurance, and the origination fee (points), expressed as a percentage.

Credit Cards: What You Need to Know

A credit card is a piece of plastic that is usually issued by a bank or store and it is used as payment loan.


You can use credit virtually anywhere that credit cards are accepted.


Benefits are that they can be used if you at the moment have no cash.

A cost would be you have to pay the money back with fees.


ANNUAL FEES are when the credit card company charges you anywhere from 15 to 300 dollars just for being in business with them. You will receive a CREDIT LIMIT on every credit card you have, it can be anywhere from 500 to 50,000 dollars. The INTEREST RATE (APR) charged to you for just being alive. PENALTY FEES are applied when you fail to meet a payment, it is charged to you the next month. An OVER-THE-LIMIT FEE is when you spend more than your allotted credit limit.

Smart Consumers: Don’t Fall Into the Credit Card Trap

There are many ways to stay safe using credit cards. First rule of thumb is don't spend more than you know you can spend. The second most biggest important tip is to not think of a credit card as means to live by. A credit card is simply a loan. Be prepared to always pay in cash when places don't accept credit cards as a form of payment. Never leave your credit card anywhere and never give it out to anybody for any reason what so ever.