CREDIT CARDS What are they and how do they work?

First, when you use a credit card; you are ‘borrowing’ money from whichever bank or agency that issued you the card. Interest is ‘the COST to borrow’ the money.

Advantages and Disadvantages advantages: Able to buy needed items now Don’t have to carry cash Creates a record of purchases More convenient than writing checks Consolidates bills into one payment disadvantages: Interest (higher cost of items) May require additional fees Financial difficulties may arise if one loses track of how much has been spent each month Increased impulse buying may occur

Incentives Reward Points - Most credit card companies offer a rewards system, such as a point for every dollar spent which allows consumers to cash in their points for gift cards, brand-name merchandise, travel services, and charitable donation. Discounts - Some credit card companies offer discounts, such as a percentage or dollar amount off, on items purchased with their credit card. Travel Amenities - such as free hotel stays Emergency Services - Travel accident insurance, roadside assistance, lost luggage reimbursement, and emergency services Buyer Protection - If you purchase an item using your credit card and are unhappy with the service or product, you may be able to recoup the money you spent on the item.

Debit Cards Debit cards all carry the symbol of one of the major types of credit cards on them, and can be used anywhere that credit cards are accepted. They both offer convenience. The fundamental difference between a debit card and a credit card account is a debit card takes it from your banking account and a credit card charges it to your line of credit.