Why YOU Should Use Credit

By: Camille Lazzarotto

What Is Credit?

Credit is the ability to borrow money from a bank and then pay them later. However you usually have to pay the banks to borrow money. This is known as APR (Annual Percentage Rate) the percentage of the money you borrowed added on to the amount you borrowed. Many people use credit once they are adults (18 years or older) to buy cars, go to college, and later in life buy a house or apartment. Many people are not able to save thousands of dollars so using credit allows them to purchase more which creates jobs to allow people to purchase more. It's a never ending cycle.

Types of Credit

There are 2 types of credit you can apply for: loans and credit cards.

Loans: Loans usually have a lower APR because it takes a long time to pay off. Loans are used for college, cars, houses, vacations, and any other big expense.

Credit Cards: These are for short term expenses like shopping trips and bills. These have a little higher APR because they can be paid off within a month or a few months.

What determines your credit?

Credit Cards

You may apply for credit cards once you turn 18. You must have a co-signer which tells the bank that if you miss a payment your cosigner will pay them. The only way to build your credit score is to apply for a credit card, usually a small one, and make your payments every month. This way you can have good credit when you apply for loans and more credit cards. Some credit cards have an annual fee which you must pay to have a credit card but some might not, you have to do research to see which credit card is best for you. You also have a grace period which gives you about 3 weeks to make your payment, after that you may be charged with a late fee. Then there is a credit limit. Every credit card has a maximum amount of money you can spend. If you reach the limit your card may be decline or you have to pay a fee for going over. Having a credit card is useful and helpful but you must be very responsible so you don't get yourself into trouble. Other than that, credit cards are here to help our financial circle keep spinning. So go apply for one if your ready!