1. Using Credit Wisely 21.3

2. Types of Credit Credit Card Allows user to charge amounts in different places Given a credit limit, or maximum amount you can spend Charge Account Credit that can be used at a certain business ex: Macy’s, Kohl’s

3. Types of Credit Loans Used for large purchases: houses, cars Usually, you put some money down ( down payment ) and the rest you pay off monthly Secured loans Guaranteed by collateral- an asset like the borrower’s home or car If fail to pay loan, the lender can take the collateral

4. Disadvantages of Credit Finance charges Fee based on the amount of money you owe Risk of Overusing May not be able to keep up on payments Could turn into low credit score Get help through American Consumer Credit Counseling or Consumer Credit Counseling Service

5. Costs of Credit Annual Fees/Membership Fees Finance Charges If you pay off balance each month, you will not have to pay these charges Annual Percentage Rate (APR) Your interest rate Lenders must tell you the yearly cost of the loan

6. Credit Reports Come from credit bureaus Collect info on how much money people owe/how good they are at paying their bills Get a credit rating- a number From 300-850