Credit - so what is it? - Text Version

Credit Made Clearer

Credit - What is it?

Hmmmm… A very good question.

Very simply:

Credit is any arrangement where you get stuff -that's money, goods or services - and agree to pay for it in the future.

Errr... Not that far in the future, I'm afraid. You'll have to repay it at regular intervals

With interest.

Ok... Well credit, like aunties, comes in all shapes and sizes, with 4 common types being:

Mortgages
Loans
Overdrafts
And -there she is - Credit Cards

A loan is a type of borrowing where you are credited with a fixed amount, for a fixed period, at a certain rate of interest.

People typically get loans for big personal purchases…

Mmmm, nice speedboat aunty.

Anyway… a mortgage is a specific type of loan for buying property.

This is 'secured' - meaning if you don't keep up with your repayments, you could lose your home…

Moving on, an overdraft is a facility that lets you spend more money from your bank account than you have in it.

Oooh, isn't that clever?

Quite clever yes.

But remember that your bank will usually charge you interest and other fees, especially if you don't tell them beforehand.

You really should have asked.

Wise words indeed aunty.

Finally we have credit cards.

Issued by a card provider, each card will have a credit limit which is yours to use when you want and for what you want

And usually, everything you buy over £100 is protected too

And you can even use them abroad!

Oui, they come in pretty ‘andy

Merci… Although you may have to pay a small currency conversion fee.

There is little chance of avoiding it unfortunately.

Just remember to keep within your credit limit and keep up with your monthly repayments.

Never forget to repay pas.