Basics of Credit
Credit can be used to repay multiple things, such as:
- student loans
- credit cards
- mortgage payments
- car payments
- personal loans
The greatest advantage of credit is that you are free to buy now and pay later. However, with that comes the high APR (Annual Percentage Rate) or what we know as interest.
How do you get credit, you ask? Well it all depends on your creditworthiness. The credit bureau will assess you based on if you pay your bills on time and if you seem like a trustworthy client. They'll send credit companies your credit report so that they know of your credit score. Your score will go up and you’ll be more likely to get more credit if you do pay your bills on time.
- Don't have to carry cash - convenience
- Creates a record of purchases
- More convenient than writing checks
- Consolidates bills into one payment
- Security of not carrying money
- Build good credit
- Penalty fees (paying bills late)
- Financial difficulties may arise if one loses track of how much has been spent each month
- Increased impulse buying
- APR (interest rate)
- If you overspend, there is a fee
- Annual Fees
Chase Freedom Unlimited vs. Discover it
This card has an annual fee of $0 making it a bonus! Its APR is 0% for the first 15 months, and after that it's between 14.24% to 23.24%. There are some fees though. The late payment fee is up to $15 if the balance is less than $100; up to $27 if the balance is $100 to less than $250; and up to $37 if the balance is $250 or more. If you want to transfer your balance it'll be either $5 or 5% of the amount of each transfer, whichever is greater.For a cash advance, it costs either $10 or 5% of the amount of each transaction, whichever is greater. You get 1.5% cash back on all your purchases!
This card also has an annual fee of $0! There is 0% APR for the first 12 months; however, the interest after that is between 11.24% to 23.24%. The late payment fee happens to be $0 the first time; and after that, up to $35. To transfer a balance it's 3% of each amount. For a cash advance it's either $10 or 5% of the amount of each transaction, whichever is greater. You get 5% cash back in categories that change each quarter, up to the quarterly maximum when you sign up. And you also get 1% cash back on all other purchases. You also get 25 days to pay your bill compared to the standard 21 days.