Credit means committing future income to pay for current needs or wants.
Reasons for Using Credit
Worst — to purchase perishables such as meals, gas, and groceries
Better — to purchase depreciable items, such as automobiles, furniture and clothes
Best — to purchase appreciable items, such as retirement funds or a home
Advantages of Credit
Immediate satisfaction of needs
Take advantage of bargains or sales
Making monthly payments can create good habits
Establish a good credit rating
Disadvantages of Credit
Encourages impulse spending
Tendency to buy higher priced merchandise
Ties up future purchasing power/ability to handle emergencies
Credit charges increase costs of purchased goods
"Easy credit" can lead to financial difficulties
Before buying on Credit, ask yourself
Do I need it now?
Is the interest rate reasonable?
Can I make these payments without skimping on necessities?
Is my income stable/secure?
Can I buy it without committing an anticipated increase income?
Do I have an emergency fund to take care of unforeseen expenses?
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