The word credit means
"something entrusted to another, loan". For you, it is money that a financial institution such as your Credit Union allows you to use. If you use credit properly, it can be a tremendous help. If you misuse credit, you can get into a lot of trouble.
There are two types of credit:
Fixed credit
A amount agreed upon between you and your Credit Union for things such as:
- car loans
- mortgages – your home
- personal loans (travel, purchases, consolidation)
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Each month, for a certain number of months, you repay a portion of the loan principal and the interest incurred to borrow the money.
Revolving credit
- Credit cards
- Lines of credit
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You repay the amount of loan (principal), plus pay your institution for the use of this money (interest). However, you only pay what you can afford to pay each month.
How much does credit cost? That depends on you!
There is a cost in using someone else's money over a period of time. This cost is called interest. When you don't pay your credit card balance off when it's due, you will incur an interest charge to borrow what remains unpaid.
The easiest way to control credit is to control how many credit cards you have. The Credit Union MasterCard is the only card you'll need.
Each month you will receive a statement showing what you've spent with your card, how much you owe and what the minimum amount you can pay is.
Remember: Always try to pay your entire balance off each month!