Credit and Loans

Good vs. Bad Credit

Using credit is not a bad thing — it’s how you use credit that can be good or bad. Some benefits of using credit include:

It’s convenient and safer than carrying cash.
You can spread out payments.
It’s helpful for emergency situations.
Using credit can help build a strong credit history.
Credit also can have its drawbacks if you don’t understand when and why to use it. Using credit to “buy now” without thinking about “paying later” can cause you to pay more than you intended through interest and fees. This can happen when:

You use credit to buy things you can’t afford and don’t really need.
You take advantage of special offers such as “no interest for 12 months” without planning to pay the debt before the special offer expires.
You don’t understand the terms of the lending agreement.
SAM tips

Use caution with two costly types of borrowing: payday loans and cash advances. Payday Loans are used to bridge a short-term gap between your current needs and your next paycheck. Cash Advances allow you to borrow cash on your credit card, up to a certain limit. Read about the pros and cons of payday loans and cash advances below.