Credit & Credit Cards

By: Xitlali Hernandez

Basics of Credit

Credit is borrowed money that you can use to purchase goods and services when you need them and agrees to repay the lender at some later date. There are two main forms of credit, personal loans and credit cards. Personal loans let you borrow money that must be repaid with interest from a lender and credit cards allow repeated transactions up to a credit limit, each time you charge something, you are borrowing the money until you pay it back. Also take note that what determinate if someone gets credit is based in factors such as his/her history of repayment and credit score/creditworthiness.

What is known is that the calculation is broken into five major categories with varying levels of importance. These categories are payment history (35%), amount owed (30%), length of credit history (15%), new credit (10%) and type of credit used (10%).

Costs and Benefits of Credit:


  • Interest rate may increase if you don't pay a form of credit at the right date
  • You may be paying more for the items you purchase than you expect


  • Allows borrowers to immediately buy things they could not afford now
  • Having good credit may give the opportunity to get into more businesses in a more easy way.
  • Credit bureaus and credit reports are not to complicated to obtain

Credit Cards

A credit card in a convenient way to pay almost anything, because it's a piece of plastic issued with the bank to allow you to purchase, but it’s important to remember that a credit card is a type of loan.


  • Interest rate tend to be a problem when paying back
  • You can overuse them and get into bankruptcy
  • Unexpected fees/penalty fees can be a problem as well
  • You will have a credit limit and if you don't follow it you will have an over the limit fee.


  • Credit cards are convenient (easy to use)
  • Helpful in case of emergencies
  • Help you get tack of your expenses
  • Purchase protection
  • Build positive credit
  • Many companies do not ask for an annual fee or if they do, it's mostly an small amount.

Comparison of Credit Cards

Card #1: Discover it

  • NO annual fee
  • Annual % Rate: 11.24%/23.24 (No APR change for paying late and 0% for 12 months)
  • Grace Period: At least 25 days from the end of the billing period, or a minimum of 23 days for billing periods that start in February, no less than 21 days.
  • Late Payment :None the first time you pay late. After that, up to $35
  • Returned check: Up to $35
  • Balance Transfer: 3% of the amount of each transfer
  • Cash Advance: Either $10 or 5% of the amount of each cash advance, whichever is greater.
  • Benefits: 5% back in categories that change in each quarter and 1% cashback on all other purchases

  • Card #2 : Barclay card Rewards MasterCard®

    • NO annual fee
    • Annual % Rate: 25.24%/25.49% (No APR intro term purchases & balance transfers)
    • Grace Period: At least 23 days (interest charges will not be applied for new purchases during this time)
    • Late Payment : Up to $37
    • Returned check: Up to $37
    • Balance Transfer: Either $5 or 3% of the amount of each transfer, whichever is greater
    • Cash Advance: Either $10 or 5% of the amount of each cash advance, whichever is greater.
    • Benefits: 2X points in gas, utility and eligible grocery store purchases, 1X points on all purchases, points don´t expire.


    Discover it Advantages:

    • Less annual rate
    • No late payment fee at first time
    • 1% cashback
    • No annual fee
    • Greater grace period
    • NO APR when paying late for first 12 months

    Discover it Disadvantages:

    • Grace period in February can vary
    • No 2x points on grocery and gas

    Master Card Advantages:

    • No annual fee
    • 2X points on gas, utility and eligible grocery store purchases
    • 1X points on all other purchases
    • Points don't expire

    Master Card Disadvantages:

    • Greater annual rate
    • Greater late payment fee
    • Less grace period

    Smart Consumers

    Tips to use credit wisely:

    • Always pay bills on time
    • Establish a credit budget and keep track of all credit purchases
    • Know how much credit debt you can handle
    • Use credit only when it's necessary
    • Read policy agreements when open a credit card/loan
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