Leyden Newsletter #70: Credit

Credit: benefits & downsides, what you need to know

The Basics of Credit

  1. Section 1

  • Credit: a 3 digit score based off of your financial decisions, a factor that determines what kind of money can be loaned to you, and what your mortgage is.

  • Kinds of credit: There are many types of credit that apply to your daily life, some examples are, student loans, car loans, mortgage, store credit, bank loans.

  • Benefits & Downsides: Interests rate are a big factor when it comes credit, an example would be buying a car, having good credit, you could have anything under 18%, and having bad credit would be an interest rate of 25% and above.

  • Determining factors for how much credit you can get: plain in simple, having a good credit score.
  • The credit bureau is the firm that investigates credit worthiness and assigns a credit rating to individual consumers.

Credit Cards: what you need to know

2.) Section 2

  • What is a credit card?: A credit card has a credit limit you can use, depending on how good your credit score is. A credit card uses loans from the bank instead of money. A credit card has annual fees, that if you don’t pay, result in bad credit and a penalty fee.

  • Where can credit cards be used?: Most businesses allow credit cards, and will usually have signs or people telling you if you can use credits cards there or not.

  • Benefits/downsides: A credit card is a very dangerous tool if not handled carefully, and in the right hands, could potentially be versatile in making your budget more flexible.

Shopping for Credit

3.) Section 3

  • Chase Freedom Card: Annual fee $0, APR, free for 15 months than a variable from 14.24% to 23.24%, Balance transfer fee, 5% of amount transferred with a minimum amount of $5

  • Discover It Card: No annual fee, APR, 0% entry APR for 12 months than a variable purchase APR of 11.24% to 23.24%, Balance transfer fee, 3% fee for each balance transfer

Being a Smart Consumer

To be a smart consumer, one would need to use their credit card wisely, for it is a dangerous tool if not used correctly. Things to consider are using a secured credit card at first , instead of a regular one so you don't accumulate a big pile of debt. Pick a regular weekly or monthly purchase such as gas for your car and pay that balance in full each month. That will get you in the habit of using your card wisely and build your credit.