Buy now… Pay Later.
Having credit means that a bank thinks you are a good person to loan money to. Banks decide on loans based on how risky the loan will be. They want to be sure you will pay back the money, plus a fee for loaning you the money. This charge is called “interest.” There are different ways to show you are a low risk: A company, such as Visa or MasterCard, will issue you a small plastic card that you can use to pay stores and others who accept that card instead of cash.
The company will set a limit for you, and bill you at the end of each month for what you spend.
You usually do not have to pay the whole bill, though, and this is considered a loan.
If you do not pay the whole bill, they will charge you interest – extra money you must pay back.
There are many different kinds of cards and the rules can get complicated.
Get help if you need to – if you spend more using your credit card than you can afford to pay back, you can get into financial trouble!
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