Credit Info

By: Simion Vybral

Basics To Credit

Credit is the ability of a customer to obtain goods or services before payment, based on the trust that payment will be made in the future. Two forms of credit are student loans and credit cards. Some advantages associated with credit are that credit is convenient (You do not need to carry a lot of money with you), Credit can help if you need money for emergencies (such as unemployment, illness, death, or property loss), and you can buy things that are needed now when you don’t have enough money to pay for them.


Vocabulary Watch

  • Annual Fees - A yearly fee charged by credit grantors for the privilege of using a credit card

  • 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.

  • Interest Rate (APR) - When you purchase a vehicle with a loan, this is the percentage dollar amount that determines the yearly cost of credit.

Credit Cards: What You Need To Know

A credit card is a small plastic card issued by a bank, business, etc., allowing the holder to purchase goods or services on credit. You can use credit cards anywhere you want, just remember to pay your monthly bill. Advantages of using credit cards are the convenience, record keeping, low-cost loans, and instant cash. Disadvantages of using credit cards include overuse, paperwork, high-cost fees, and unexpected costs.


Smart Consumers: Don't fall into the Credit Card Trap

Use credit only if you're certain you can repay the debt. Avoid buying things you don't need. Pay bills on time to keep charges down. Pay the full balance every month if you can.