Uses and Costs of Credit

What is the difference between cash and credit?

• Cash is money you borrow, but have to pay back, while credit is money you have immediately to use.

• Cash is money that grows on trees like leaves, while credit is money that you receive in the mail.

• Cash is only used to save in a bank, while credit is used to pay for goods and services.

• Cash is money you have immediately to use, while credit is when you have to borrow money and pay it back to someone.

Why would someone need to use credit?

• When there are not enough workers to do a job.

• When there is extra money to pay off bills.

• When there is not enough cash to pay for an immediate need or want.

• When there is exactly how much money needed to pay for something.

When you use a credit card, what are you really doing?

• You are lending money to a bank or business.

• You are saving the money for a rainy day.

• You are earning interest on the money.

• You are borrowing money from a bank or business.

When you borrow money, you are expected to pay the money back plus additional money. What is that additional money called?

• Inflation

• Capital

• Interest

• Savings

Why should you pay a loan back quickly?

• You will owe less interest.

• You will owe more interest.

• You will earn more interest.

• You may lose your job.