Text 4: obtaining and using credit

Credit is an arrangement that enables us to receive cash, goods or services now, with the understanding that we will pay for them in the future. Charge accounts, credit cards, installment plans, car loans and household mortgages are some of the best known forms of credit. Like so many things, credit has its advantages and disadvantages.

The principal advantages of credit are:

* Immediate possession. Credit enables us to enjoy goods and services immediately.

* Flexibility. Credit allows us to time our purchases so as to take advantage of sale items or other bargains even when our funds are low.

* Safety. Credit cards and charge accounts provide a safe and convenient means of carrying our purchasing power with us while we are shopping or traveling.

* Emergency funds. Credit gives us a cushion in an emergency (like an automobile breakdown when money is needed to get back on the road).

Here are some of the disadvantages of buying on credit:

• Overspending. Sometimes, credit cards and charge accounts make it too easy to spend money. Then, as the debts mount, it is often difficult to make the
necessary monthly payments.

* Higher cost. It usually costs more to buy on credit than for cash. One reason is that stores offering credit often charge more than those that sell only for cash. Another is that interest or other charges are often added to the cost of goods sold on credit.

* Untimely shopping. Credit shoppers often ignore sales and special prices because they can buy what they want on credit whenever they want it.

Дата добавления: 2015-08-20