1. T
Credit
5.01
Explain advantages and disadvantages of using credit for the purchase of goods and services.
G23

2. Terms Credit Creditor Debtor
Privilege of using someone else’s money for a period of time.
Creditor
One who sells on credit or makes a loan.
Debtor
Anyone who buys on credit or receives a loan.
Obligated to pay back the loan.
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3. Why Use Credit? Convenience Immediate Possession Emergencies
Shop without carrying cash.
Immediate Possession
Allows you to have possession on the goods or services now.
Emergencies
Helps in case of a serious situation.
G25

4. Benefits (Advantages) of Credit
Convenience
Credit can make it easy for you to buy. You can shop without carrying much cash.
Immediate Possession
Credit allows you to have the item now. A family can buy a dishwasher on credit and begin using it at once.
Savings
Sometimes credit allows you to buy an item on sale at a good price.
Credit Rating
A person’s reputation for paying bills on time.
Useful for Emergencies
Access to credit can help in unexpected situations, such as car repairs.

5. Credit Concerns (Disadvantages)
Overbuying
A common spending hazard of credit involves buying something that is more expensive that you can afford.
Careless Buying
Credit can tempt you to not wait for a better price on an item you want now.
Higher Prices
Stores that only accept cash may sell items at lower prices than stores that offer credit. Giving credit to customers is expensive for stores and the results can be higher prices.
Overuse of Credit
If you buy too much on credit your monthly payments may be to much for you to afford. This problem can result in bad credit history, repossession, or loss of home.