Credit Cards

Should we be protected from credit, or encouraged to use it?

The Basics of Credit

Credit is the ability to purchase something then pay for it later. There are two different types of credits, personal loans and credit cards. Personal loans are often used on mortgages, collage, and purchasing new cars, while credit cards are use more on a daily basis like groceries shopping, or shopping for clothes. But credit is not free like mentioned before you have to pay back the money you borrowed with an interest rate. The interest rate may vary and if you miss a payment your interest rate goes up and penalty fees start to add up. Which it's very important to pay your bill every month, but also to pay more than the minimum. To get credit you first must be creditworthiness, which means you have to be reliable to be able to pay back a loan. Also credit limit depends on how much you earn, if you have a high paying job your credit limit might be higher than others.

Vocabulary Watch

APR- annual percentage rate, annual rate that is being payed for borrowing money in a percentage form.

Credit- ability to purchase something then pay for it later. (buy now, pay later)

Credit Worthiness- reliability to be able to pay back a loan.

Credit Cards: What You Need to Know

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

To keep yourself out of debt, you should pay off your loans each month more than the minimum if you can and and also pay on time, because you would not want to get a penalty fee and your interest rates to go up. Also do not spend more than you can afford and have no intention on paying it back. Remember a credit is when you borrow money and then pay it back later.