Credit Newsletter Project

GIsselle Payan Consumer Ed Period 2

Section 1: The Basics of Credit

  • What is credit? A way to make big purchases when you want to make them, but you have to pay it back.
  • What are the forms of credit? What costs are associated with credit?
  • What determines if someone gets credit and how much they get? Character, trustworthiness, Capacity (to pay it back), Creditworthiness, and Collateral. The amount of money they get determines on the bank and the amount they want.

Basics of Credit Vocabulary:

  • Credit: confidence in a purchaser's ability and intention to pay,displayed by entrusting the buyer with goods or services without immediate payment.
  • Credit Score: A statistically derived numeric expression of a person's creditworthiness that is used by lenders to access the likelihood that a person will repay his or her debts
  • Credit Bureau: a firm that investigates the creditworthiness of and assigns a credit rating to a client's customers or potential customers.
  • Credit Report: A detailed report of an individual's credit history prepared by a credit bureau and used by a lender to in determining a loan applicant's creditworthiness.
  • Creditworthiness: Having a good credit score.
  • Interest (APR): The annual rate that is charged for borrowing (or made by investing), expressed as a single percentage number that represents the actual yearly cost of funds over the term of a loan.
  • Lender: To give (money) on condition that it is returned and that interest is paid for its temporary use credit cards.
  • Personal Loans: a loan that establishes consumer credit that is granted for personal use; usually unsecured and based on the borrower's integrity and ability to pay

Credit Cards: What You Need To Know

  • What is a credit card? A card that allows you to borrow money but you must pay it back, possibly with interest.
  • Where can use credit cards? Basically anywhere they're accepted; some stores do not accept them or exclude certain companies.
  • What are the benefits and costs of using credit cards? The benefits of using a credit card is that you can receive airline miles, points, and cash back (Usually after a certain amount of money spent). The costs of using credit cards are that you obviously have to pay them back. This can also be accumulated with interest if you don't pay for it all at once. And, it can be terrible for your credit score if you're late on a payment.

Credit Card Vocabulary Terms

  • Annual Fees: A yearly fee charged by credit grantors for the privilege of using a credit card.
  • Credit Limit: The amount of credit that your bank/provider has given to you.
  • Interest Rate (APR): The annual rate that is charged for borrowing (or made by investing), expressed as a single percentage number that represents the actual yearly cost of funds over the term of a loan.
  • Penalty Fees: Fees associated with not paying your bill on time.
  • Over-the-limit fee: These fees are accumulated by spending over your credit limit.

Smart Consumer: Don't Fall into the Credit Card Trap

Safe Ways of Using Credit Cards

  • Always on use secure websites
  • Pay more than the minimum balance
  • Keep track of your spending
  • Always pay on time
  • Don't overspend
  • Use only for necessities
  • Keep information safe
  • Sign your credit card
  • Never share credit card information