Credit Cards : A Business Person 's Money For A Period Of Time

1356 WordsMay 22, 20176 Pages
What is credit? Credit is borrowing someone else’s money for a period of time. A creditor is a business person who loans money on credit. A debtor is any person or business that buys on credit or receives a loan. Credit cards can be used in an efficient way or in an inefficient way. Borrowing money can help a person have a comfortable living or it can lead them draining away their savings. Who uses Credit? People use a credit card to mostly buy expensive items such as cars, houses or high-priced appliances. Businesses also use credit cards to purchase land, equipment and buildings. Sometimes credit cards can be used for cheaper items such as theatre tickets, or restaurant meals because it’s more accessible than cash. Advantage of Credit…show more content…
Consumers may be unable to pay off their bills/payment Charge accounts A charge account is a contract between a consumer and a retailer for sales in the retailer’s store. Charge accounts comes in different types. A revolving credit account can let consumers buy goods at any time using their credit card but they have to pay a minimum monthly payment charged with interest until they paid off all the money they spent on their credit card. Layaway plans Some retailers offer a layaway plan. A layaway plan is when a customer wants a product but cannot pay the full price and pays a fraction for it on that day. Thus the retailer keeps the product for a few months or weeks until the customer can pay for the full price.The customer may be charged for interest for that service. Types of Credit Card There are 3 basic type of credit cards. Charge cards issued by retailers,bank issued and cards issued by travel and entertainment companies. Bank issued cards are currently the most popular credit cards. They are generally used for goods or services such as hotels or airlines. Some cards are free but others contain transaction fees to cover expenses. There are some benefits offered to gold or platinum credit cards such as travel and car rental insurance. Bank issued credit cards Visa and mastercard are the most popular bank issued credit cards. Customers have to meet certain standards to not have interest charged on their credit card such as paying the amount they owe every

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