Being Smart With Your Money

by: Paige Horvath

The Basics of Credit

Credit is the ability of a customer to obtain goods or services before payment with the exception that you will pay it back those loans. To be approved you have to take out a loan demonstrated through your credit score. Your credit score can also determine if someone can be approved or declined for a credit card. To receive your credit score a lender has to establish your creditworthiness based on your credit report that has been provided to them by a credit bureau. There are many forms of credit such as student loans, credit cards, store credit, car loans, and home mortgage. The benefits of using credit is that you can use it for emergencies, credit card benefits, it builds your credit, you can buy things online with your card. You can also use it for gas and reward points.

Although using credit also has its costs. While using credit you can get finance costs, card fees and also you can go into debt. You have to be responsible in order to keep yourself out of these bad things.

Credit Terms

What you need to Know

Credit cards: A card used to purchase goods on credit, you can buy things that you currently don't have money for.

Benefits and Costs of using credit cards

Benefit: you can borrow money from the bank until you have the money to pay for it.

Cost: If you don't pay the money back you can get fees.

Annual Fees: The fee the credit card company charges you yearly.

Credit Limit: The amount of money you can spend per month.

Interest Rate: The rate which they charge you extra.

Penalty fees: Fees you get charged for not paying in time or at all.

Over the limit: Spending more money than your credit limit gives you.

Tips to being a Smart Consumer

1. Know your budget and keep reminding yourself what that number is.

2. Only keep a small amount of money with you when you go shopping.

3. Use coupons to try and save money also go shopping when there are sales.

4. Recognize your limitations.