Credit Card: Positives and Negatives
A plastic card that is provided by the banks to the consumers to use any services or purchase any goods on credit is known as the credit card. The card holder must pay the credit card bills in every billing cycle if the card is utilized for any purchase, or the banks levy a high interest on the amount due. Almost all banks or financial institutions provide credit cards. Every credit card holder has a line of limit allocated on the credit card and the total limit cannot be utilized as some amount is reserved to be withdrawn in the form of cash credit. This limit is decided by the banks depending on the credit history of the card holder.
Workshop Summary
This workshop has been a great learning experience on the credit card, the positives and negatives of holding a credit card. The workshop is targeted for the students to know how the credit card system works in a practical environment, and it has been instrumental to make the students aware about the credit score and its important aspects. The advantage in holding a credit card is, you can use it when you are out of cash and pay the bill later.
The credit bureau gathers information from different centers on the individual consumers and their credit card uses and provides their credit information. It is better to have small credit limit to be free from large debts. The credit card providers are lenient in providing extra time once in a year in case if the due amount on the card cannot be paid on the due date.
Practical Application
As we are aware that the credit card is used to make purchases of goods or services, it can also be used to repay the student loan. If the student is a defaulter on a Federal student loan, the loan can be paid using the credit card. The credit report contains information of the person’s residence, office, how the bill is paid, and criminal charges and so on. This report is created if there is a student loan, mortgage loan, credit card, or an auto loan on that person, and it is gathered by the Credit Reporting Agencies (CRA) like Equifax, Experian, and TransUnion and forwarded to the banks or financial institutions. The Credit Bureau is the public CRA. Depending on the credit report, the banks check the credit worthiness (credit score) of the individual before providing the credit card. The score is checked to make sure that the person can pay the debts. Any credit rating above 700 stands a fair chance for easy loan approval.
High credit can be obtained if the bills are paid on time without paying any interest, or missing the date when the dues on the card had to be paid. This information is very essential to be implemented in the real world as it provides an insight about the credit rating system, its working principle and the advantages of having a good credit score.
Personal Impact
As the credit rating and the credit score are very important in every aspect of the financial domain, I would ensure that I maintain a good Fair Isaac Corporation (FICO) score and gain more information on what goes into the credit score, maintain low credit balance, frequently keep a track on my credit history, pay the bills on time, minimize my applications for new credit. I can lead from the front and be a good example for other fellow students to maintain their credit rating. Before providing any personal details like the social security number I would be careful enough to research on the financial institution or the banks to ensure it is not a fraud. Being a responsible citizen, I would read the terms and conditions of the loan or credit card application. I would start with a small credit that gives me advantage to be under low debt, and then increase the credit limit based on my financial stability.
