Family Finance: Credit and Debt

Credit can be a successful financial management tool also for teaching kids about money. It allows you to buy things when you don't have cash on hand to pay for them. Credit can take many forms, including installment loans, credit cards, department store revolving charge accounts, home equity loans, and other kinds of time payment plans.

Credit

Credit is something everyone uses. Every time you use the telephone or turn on a light or the air conditioning, you're using credit just as you are every time you use a credit card or take out a loan. Credit represents an agreement to receive goods, services or money now and pay for them in the future.

Credit Cards and Credit Card Debt

Over half a billion credit cards are in use today with balances totaling more than half a trillion dollars. Consumers pay over $70 billion in interest and fees on bank cards alone each year. More than 3 billion mail solicitations for credit cards are mailed annually in the United States alone.

Debit Cards

Debit cards, which use money from your own bank accounts, are different from credit cards.