Credit and Debt Management

3.2  Credit and Debt Management
  • Credit is a contractual agreement between the supplier (bank) and the consumer.
  • Credit is a postponement of payment facility provided by the supplier to the consumer.
Advantages of credit card:
  • Credit cardholders can enjoy a reward system in the form of cash rebate or point redemption.
  • Does not require us to carry a lot of cash.
  • Easy and efficient payment method.
  • Convenience of buying goods and services online.
Disadvantages of credit card:
  • Incur charges such as annual fees, finance charges (interest), cash advance interest charges and late payment charges.
  • Overspending
  • Some stores do not accept credit payment.
  • Debt is an amount that has been borrowed but has not been settled.
Flat interest:
  • The interest rate will be calculated on the original loan amount over the term of the loan.
  • The amount of interest charged per month is fixed.
Interest on balance:
  • The amount of interest charged each month on the loan depends on the amount of the loan balance of that month.