Being a Smart Consumer

The Basics of Credit

Credit is the ability to borrow money in return for a promise of future payment. Also know as buy now, pay later. There are two types of credits: personal loans and credit cards. To your disbelief, credit is not free! There is an interest rate that you must pay. In order to receive credit, you must demonstrate your creditworthiness. Creditworthiness is your reliability to pay back loans. The 3 C's-Capital, Capacity, and Character- of credit help determine if someone gets credit and how much of it.

The credit of B.R.R.(bureau, rating, and report) is something that everyone should have a gist of. The credit bureau collects information on consumer's credit and sells it, has a record of every adult, and assigns credit scores. With Credit Rating (Score) the higher the score the better you are. What effects scores is when you pay payments on time, what your debt is, and your history. A credit report contains your credit information and score. Your credit report it provided to you by the credit bureaus and is requested by lenders.

Vocabulary Watch

Credit Card: What You To Know

A credit card is a small plastic card issued by a bank or business allowing the holder to purchase things on credit. Before purchasing a credit card, there are a few things you should know. Annual Fees are fees charged by a credit card company each year for the use of a credit card. Along with the annual fees, there is Annual Percentage Rate, which is the interest rate charged on credit card balances expressed in a standardized way. The thing with credit cards is that you have to be careful, and not go off the reins by using it for everything. Credit limit is the amount of money that can be charged to a credit card. If you go over the limit there is a fee charged when your balance goes over your credit limit. There is also a penalty fee when you make late payments. Despite all this, the good thing about credit cards is being able to pay for necessities that you don't have the money for at that very moment.

Smart Consumers: Don't Fall Into The Credit Card Trap

So you don't fall into the many credit card traps, you need to become a smart consumer. Here are some smart, helpful tips when having a credit card.
  • Understand the terms of the card. Know the interest rate, the fees and the payment schedule.
  • Beware of 0 percent teaser rates. While 0 percent interest is appealing, the offer may tempt you to spend more than you can afford to repay.
  • Set a budget.
  • Pay on time. You will start to build a good credit history if you pay on time
  • Pay in full. To avoid costly interest charges, try to pay your bill in full each month. If you can't, pay as much as possible.
  • Don't go over the limit. If you spends too much, additional fees will be added.