Credit.
What is credit?
Credit, although it is not only involved with money, is a financial term for the trust between a lender and a borrower. It is basically when the lender trusts the borrower to return all the money or resources loaned to him, but at a later time.
Pros and Cons of credit.
Credit has it's ups and down, since credit is all about spending someone else's money, it can get a bit tricky if you are foolish with paying them back.
Pros:
-Convenient: A credit card is with a person all the time, and does not have to necessarily be refilled or renewed to make purchases with it. Because of this, a credit card holder never has to worry about how much money they have on them, because they have access to their entire credit limit.
-Security: Most credit cards have an excellent security system, and will not penalize you for getting your card stolen. If you were to loose your wallet full of cash, someone could take your cash and that would be the end of it. With a credit card, you could simply call and cancel the card and they would promptly send you a new one.
-Rewards: Many credit cards have rewards programs which encourage you to spend money on certain items such as gas or airline tickets. By doing this, the customer will typically receive points that they can use to get gift cards, a discount on gas, or even airplane tickets.
Cons:
-Less attachment: Because using a credit card does not entail loosing anything physical per say, most people feel more inclined to spend money that they would otherwise not have with cash.
-Interest: Many credit cards include interest on loans that are paid late, and often see to astronomically increasing that rate after the first late payment.
-Fee's: Credit cards also entail a bundle of intelligently placed fees to try to suck money out wherever they can. There are fee's for late payments, exceeding credit limit, foreign transaction fee's, activity fee's, ext.
How to use credit.
There are many resources to train you on how to properly handle credit, but here is what to do and what not to do when it comes to using credit.
DO NOT:
-Overcharge a credit card
-Make late payments
-Reach or go over the credit limit
-Have credit cards you are not using
DO:
-Keep recites to keep track of spending
-Pay on time and in full
-Keep in contact with the credit card company if you encounter any problems
-Keep a low credit limit so you are inclined to spend less
Sources:
- http://en.wikipedia.org/wiki/Credit_(finance)
- http://www.practicalmoneyskills.com/personalfinance/creditdebt/cards/proscons.php
Credit, although it is not only involved with money, is a financial term for the trust between a lender and a borrower. It is basically when the lender trusts the borrower to return all the money or resources loaned to him, but at a later time.
Pros and Cons of credit.
Credit has it's ups and down, since credit is all about spending someone else's money, it can get a bit tricky if you are foolish with paying them back.
Pros:
-Convenient: A credit card is with a person all the time, and does not have to necessarily be refilled or renewed to make purchases with it. Because of this, a credit card holder never has to worry about how much money they have on them, because they have access to their entire credit limit.
-Security: Most credit cards have an excellent security system, and will not penalize you for getting your card stolen. If you were to loose your wallet full of cash, someone could take your cash and that would be the end of it. With a credit card, you could simply call and cancel the card and they would promptly send you a new one.
-Rewards: Many credit cards have rewards programs which encourage you to spend money on certain items such as gas or airline tickets. By doing this, the customer will typically receive points that they can use to get gift cards, a discount on gas, or even airplane tickets.
Cons:
-Less attachment: Because using a credit card does not entail loosing anything physical per say, most people feel more inclined to spend money that they would otherwise not have with cash.
-Interest: Many credit cards include interest on loans that are paid late, and often see to astronomically increasing that rate after the first late payment.
-Fee's: Credit cards also entail a bundle of intelligently placed fees to try to suck money out wherever they can. There are fee's for late payments, exceeding credit limit, foreign transaction fee's, activity fee's, ext.
How to use credit.
There are many resources to train you on how to properly handle credit, but here is what to do and what not to do when it comes to using credit.
DO NOT:
-Overcharge a credit card
-Make late payments
-Reach or go over the credit limit
-Have credit cards you are not using
DO:
-Keep recites to keep track of spending
-Pay on time and in full
-Keep in contact with the credit card company if you encounter any problems
-Keep a low credit limit so you are inclined to spend less
Sources:
- http://en.wikipedia.org/wiki/Credit_(finance)
- http://www.practicalmoneyskills.com/personalfinance/creditdebt/cards/proscons.php