Credit Cards
Credit Cards: What You Need To Know
Types & Sources of Credit
Single-payment credit
This is when items and services are paid for in one payment, within a stated time period. Interest is typically charged upon maturity of the loan and there are no minimum monthly payments. This type of loan is usually issued when payment is coming from something other than a traditional income (i.e. a settlement or inheritance).
Examples:
- Financial institutions
- Some retail businesses
- Other service providers
Installment credit
This is when merchandise and services are paid for in two or more regularly scheduled payments of a set amount. The interest is included. Money may also be loaned for a special purpose. The consumer agrees to repay the debt in two or more regularly scheduled payments.
Examples:
- Some retail businesses, such as car and appliance dealers
- Commercial banks
- Consumer finance companies
- Credit unions
Revolving credit
Many goods and services can be purchased using revolving credit. An account is established with a preset credit limit and can be used and paid down repeatedly. Required minimum payments must be made to avoid adverse action and interest will typically accrue on any balance not paid in full within the stated grace period. Examples:
- Retail stores
- Gas stations
- Financial institutions that issue credit cards
