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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.

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