Credit is receiving goods, money, and services based on an agreement between the lender and the borrower. It is a broad term that encompasses loans, credit cards, and other types of credit.

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Credit cards are plastic cards used to purchase something or to get cash now with the promise of future payment.
A credit card can have a float (the time lag from purchase to payment) of 40-50 days without being charged interest if paid in full. Otherwise, using credit is going to cost money.
1. Convenience (you don"t have to carry around large sums of cash or wait to buy things)2. Accumulating rebates, frequent flyer points, gifts, and other benefits (for signing up for a credit card or reaching certain amounts of usage)3. Identification4. Emergencies (automobile repairs/medical expenses)5. Big ticket items (get the product now and gradually pay for it)6. Simplifying record keeping (detailed monthly statement)7. Insurance benefits
- Best value guarantee (if you buy an item and it goes on sale within 60 days, you may be entitled to a refund on the difference)- Buyer"s assurance plan (extended warrantees)- Car rental loss and damage insurance- Purchase protection plan (some items purchased with a card are protected against damage & theft)- $100,000 travel accident insurance (if you used your card to purchase tickets, it covers death & dismemberment for you & family on a common carrier)
- Overextending
- people overuse credit and go deeply into debt. If 20% of your take-home pay goes to making debt repayments, you are "overextended".- High interest and finance charges (teaser rates - the company offers low rates upon signing that jump up later)- Add-on fees - Lost cards- Loss of privacy (frauds)- Loss of freedom (when you"re so tied down with past purchases that you can"t make new purchases)
In order for creditors to lend you money, you need to be perceived as a good credit risk. What are 5 C"s of Credit Worthiness
?
1. Capacity (income available to make repayment)2. Capital (net worth)3. Character (past credit history & reliability)4. Collateral (property used to secure repayment of a loan; if you can"t pay off your debt, they can take your car)5. Conditions (general state of the economy at the time of credit application)
- Open a checking/savings account- Use credit and make payments when they are due- Pay off existing loans (student loans)- Get a steady job- Buy or rent for a year or more (establishing stability)
- A credit bureau is a type of reporting agency that collects, tires, and sells information about individual borrowers to potential lenders.- The top 3 credit bureaus are Equifax, Trans-Union Corportion, and Experian.
- Many of the rules governing reporting procedures were formalized by a 1996 amendment of the fair credit reporting act; for instance, all Americans are entitled to get a free, annual look at their credit reports.
- Third parties who are loaning money to you, renting to you, providing insurance to you, or providing a credit card look at your credit report. Employers look at your credit report as well.
- A FICO Score is a credit-scoring model that many lenders use. It measures the risk to the potential lender.A good score is 720+. A bad score is 500-.The median score is 623.The range is from 300-850.- VantageScore is a new scoring technique with a range of 501-990.
1. Use it only when necessary.2. Know what your agreement says (APR, add-on fees).3. Make payments on time.4. Pay off credit card charges in full each month.5. Inform creditors if you cannot make all or part of your payment (they are more understanding when you call them first).

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What percentage of full-time undergraduates own credit cards? What percentage of students expect their parents to help them after graduation?
- 77% of full-time under gads have credit cards. You can have a credit card in your own name starting at 14 years old.- 54% of students expect their parents to help support them after graduation.
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Essentials of Investments with S&P bind-in card (Irwin/McGraw-Hill Series in Finance)7th EditionAlan J. Marcus, Alex Kane, Zvi Bodie
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Connect Finance Online Access for Essentials of Investments9th EditionAlan J. Marcus, Alex Kane, Zvi Bodie
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