So You're 18!

Here are some tips for being a responsible adult with credit

Section 1

What is Credit??

The ability to borrow $$ in return for a promise of future payment from a lender (An organization or person that lends money).

aka “Buy Now…Pay Later”

Example: when looking to buy a car from a dealer, house, or school/personal loans.

Forms of Credit

There are two types of credit; credit card and loans.

What is a credit card and is there a catch to using one?

A credit card allows you to borrow money from your bank to make your purchases, but you will pay interest (a set percentage you will have to pay besides the purchase).

Credit cards and debit cards are not the same, debit cards you can only use the money you have available, and credit cards you are borrowing money until you hit a set limit. So you need to be responsible when using one or getting one.

Interest (APR)

The charge for the privilege of borrowing money, typically expressed as an annual percentage rate. And, normally since you do not have a lot of credit, the banks give you a high interest rate, but after a year or more depending on how responsible you are with the monthly payments.

What determines if someone gets credit (card) offer?

Credit is determined by your Credit Score -- A credit score in the United States is a number representing the creditworthiness (reliably) of a person, the likelihood that person will pay his or her debts.(Wikipedia). You can check your check score with the credit bureau, a company that collects credit ratings.

Section 2

Terms you should learn!

1. Annual Percentage Rate (APR)- Annual (or annualized) percentage rate, typically of interest on loans or credits

2. Liability- A thing for which someone is responsible for; example debt or financial obligation.

3. Collateral- Something pledged as security for a repayment of a loan. Example: Your car title.

Section 3

Ways to be responsible with Credit and Credit Cards!

Know what you're getting into- especially important for young adults who don't truly understand how credit works. Ask your parents or a immature adult, even Google might help.

Make full payments- Paying the balance IN FULL every month will show other lenders that you are responsible borrower.

Avoid impulse buys- Needs over wants!!

Limit the number of credit cards you apply for- When you apply for a lot of credit cards, it gets recorded and can damage your credit rating because it seems that you may rely too much on them.