by: Abigail Gomez

Basics of Credit

Credit is the ability to obtain goods or services before payments. Credit can come in a card issued by your bank to be able to purchase goods and services known as a credit card. You must pay interest (APR), an interest rate charged on the amount borrowed. In order to get credit, they must check if you are creditworthiness. Banks want to know if you're reliable and are able to pay the loans. Credit bureau can check your credit report and credit score to keep track of your credit use. It can be requested by a lender, person that lends money. In an emergency or loans for such as mortgage or a car, you can get a personal loan.
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liability: state of being responsible for something

credit limit: the most you are allowed to owe on your account at any time

penalty fee: fee due to late payments or over credit limit resulting in an increase in interest rate

capacity: the maximum amount that something can contain, the limit

What you need to know

A credit card can be issued by your bank to be able to purchase goods or services credit. You can use your credit card whenever you are going to make a purchase such as going to the store, restaurant or online shopping. When using your card you have to be careful you don't go over your credit limit or you'll pay an over-the-limit fee. You can also get a penalty fee if you make a late payment. You will get charged with interest rates for the amount you borrow. Separate from your interest rates you will pay annual fees. The fee will be under your annual bill for having the use of a credit card and participation fees.

Smart Consumers

Tips on how to safely use your credit card:

  • Don't give your credit card information to any e-mails received or to any strangers.
  • Don't give your credit card number on any unsecured websites.
  • Check your credit card statement and make sure there are no other charged you did not purchase.
  • Carry your credit card in a safe place and don't leave it lying around.
  • Control on how much much money you are spending.