Credit Card
(revolving credit) |
Banks, credit unions, department stores, and gas stations |
| • |
To build credit—to demonstrate that you
can borrow money and pay it back on time. |
| • |
As a convenience, instead of carrying a check
or cash. |
| • |
To buy large items, such as appliances, that
you can pay for out of your savings when the credit card payment
is due. |
| • |
For online purchases. |
|
| • |
Use bank and credit union credit cards anywhere.
Use department and gas station cards only at the business that
issued you the card. |
| • |
No payoff deadline. |
| • |
Minimum monthly payments vary, based on the
balance. |
| • |
Usually charges the highest interest rate of
these four types of credit. |
|
| Installment Loan |
Banks, credit unions, auto dealers, finance companies |
| • |
To buy an item that you can’t afford
to pay for all at once, such as a car. |
| • |
To purchase large items, such as appliances
and home entertainment pieces. |
| • |
Personal loans. |
|
| • |
Payoff deadline ranges from a few months to
five years. |
| • |
Fixed monthly payments. |
| • |
Usually charges a lower interest rate than
a credit card. |
|
| Student Loan |
Banks, credit unions, and the federal government |
| • |
To finance your education—including loans
for tuition and expenses used for trade and technical schools;
colleges; and graduate, medical, and law schools. |
| • |
To advance your job skills—including
loans for special job training. |
|
| • |
The payoff date may depend on your income level;
some loan programs let you delay making payments until you
graduate. |
| • |
Fixed monthly payments. |
| • |
Usually charges a lower interest rate than
an installment loan. |
| • |
May provide an income tax break on interest
paid to the lender. |
|
| Mortgage Loan |
Banks and credit unions |
| • |
To finance the purchase of a home. |
|
| • |
Payoff date, for bank or credit union loans,
ranges from 15–30 years. Payoff date for Habitat for
Humanity mortgage loans is 20 years. |
| • |
Fixed monthly payments. |
| • |
Usually charges a lower interest rate than
an installment loan. |
| • |
May provide an income tax break on interest
paid to the lender. |
|
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NEFE. All rights reserved.
