Corissa Carrillo, Period 2

Section 1: The Basics of Credit

Credit is the ability to obtain goods or services before payment and is solely based on the trust that the payment will be made in the future. Some types of credit are overdrafts, credit cards, personal loans (from banks), credit union loans, hire purchase, credit sale agreements, top-up mortgages, and money lending. The main cost that comes along with using personal loans from banks or from a lender is interest. Interest is money paid back at fixed or regular rate for the money that was lent and is usually paid over a short period of time. Another cost is your credit score. Credit score is the a number determining a person's creditworthiness and whether they will actually pay back the money in the future. There are three things that determine if someone gets credit and how much they will get: credit score, credit report, and the credit bureau.

Section 2: Important Credit Vocabulary

These are the top four terms needed to know:

1. Credit Report: is a credit history/record of an individual's or company's past of borrowing and repaying; also late payments made and bankruptcy.

2. Credit Bureau: is a company that collects the credit ratings of individual's and makes them available to credit card companies, financial institutions, etc.

3. Credit Score: is a number that determines an individual's creditworthiness and if they will actually pay back the money lent.

4. Interest: is money paid back at a fixed/regular rate over a period of time for the money that has been lent.

Section 3: Credit Cards: What YOU Need to Know

A credit card is a plastic card issued by the bank or a business for the purchase of goods and services. You can use credit cards at ATMs vending machines, restaurants, and stores. With a credit card comes a credit card limit. A credit card limit is the limit of money available to you on your card. As you purchase items then your credit goes down, but as you pay it off your credit goes back up. Some benefits to having a credit card is that it is convenient keeps record of purchases, low-cost loans, instant cash, purchase protection, etc. Some costs that come with a credit card are annual fees, interest rates, penalty fees, and over-the-limit fees. Annual fees is a fee paid every year and is separate fee from the amount of the interest rate on purchases. Over-the-limit fees are fees that are penalized against you when you purchase something and go over your credit card limit. Penalty fees are fees penalized against you when you violate the terms of your cardholder agreement and other requirements related to your account.

Section 4: Smart Consumers-Don't Fall Into the Credit Card Trap!

These are the top ten tips to keep safe when using your credit card:

1. Don't give out your account number when over the phone. They can be recording you! Unless you've initiated the call, then you may do so.

2. Get a credit card that has extra security features, such as a photo ID.

3. Never write your account number or PIN on the outside of an envelope or postcard.

4. Draw a line through any blanks on charge slips in order to prevent any charges.

5. Don't sign a blank slip charge unless it's necessary or if it's in an actual store.

6. Always save receipts.

7. Always check your receipts against your monthly statements.

8. Make a list of your credit card numbers, the expiration dates, and the toll-free numbers of your credit card companies. This is just in case one of your cards get lost or stolen, so keep this in a safe place!

9. Only carry cards you will need; especially when traveling pretty far distances.

10. Never lend your card to anyone and don't ever leave receipts or card laying around anywhere.

Hope these tips help! Enjoy using your credit card!