(not credit CARDS, just credit) and wat can go wrong when you use credit?

well if you spend more than you make that is a big problem. and unfortunately some people do not seem to comprehend that.
also credit can make you look like you have more than you really do.
some people like to look like they have lots of money.

credit is not real popular right now. what can go wrong? l got an idea. watch the news. world markets are in turmoil we're in a recession headed for depression the market is in the woorst shape its been since 1935. all due to easy credit and corporate greed.

Credit is so popular because it allows u to buy items without actually having money ''in hand''. You can buy & buy & pay it off later.

The downside is that credit can sometimes have ''interest that a percentage fee.

For instance, a credit card u have my have 16% interest ( l am not sure if any cards have that much, but let is say that this one does). You buy things on ur credit card & at the end of the month, ur credit card company issues a bill. You then have a period of time to pay off ur credit card bill. If u don't, then u have to pay whatever u owe, plus an additional 16% of what u owe. So if u owe $100, then you'd have to pay $100 (initial bill) + $16 (%16 of $100) = $116.

Credit Cards do have credit limits (like they only allow u to spend up to a certain amount), but these can often be increased on request.

Some credit cards often have ''points'' attached when u spend. The more u spend, the more points u get. And these points can often be redeemed to get stuff like appliances, vouchers or even trips. But u often have to spend hundreds of thousands of dollars to get enough points to do so.

There are many people today that spend their salary before they have it, it is like counting the chicks before the egg hatch. If you're doing it, then you will used to it.

Credit is convenient, & is basically a more secure transaction in the short term for both buyer & seller. The buyer does not have to carry a lot of cash, & has a big friend (bank or Visa) to back him up if the product is faulty. The seller knows that she will get her money, & that people will buy more from her if they do not have to pay cash all at once.

Credit also allows u to leverage whatever cash u have to buy more things, including income-producing investments. For instance, say u had $100000 & could buy one house with the cash. Alternately, u could put 20% down on 5 houses, finance the rest for each (credit) & make rental income on all. The person buying the 5 houses would be highly leveraged. Even huge companies with lots of assets still use credit to purchase materials, etc., because it increases their leverage (ability to invest). So, the current credit crunch means it is tougher for this businesses to operate.

Nothing is free - credit costs include higher prices & risk. The higher prices r because the merchant/seller must recover the cost of doing business with credit (e.g., Visa & Amex charge a percentage of the sale to the merchant), so this will be passed on to the consumer. The risk is easy to see in the leverage example above - what if the 5 houses do not rent? The owner then wo not have cash flow to pay the mortgages.

People hooked on the convenience of credit do silly things like buy more than they can afford. Generally any period in which u r extended credit (by a Visa card, a bank, etc) u will be charged interest. This interest can compound over time, & makes what seemed like a ''bargain'' purchase become very expensive. In the era of refinancing mortgages that helped lead to the current economic crisis, people were using home equity loans to purchase cars, toys, & other goods which do not last as long as the 30-year loan they were folding it into. This means that they pay for the toy, car, vacation, etc. for the entire lifetime of the loan! This is generally NOT a good deal.

So, remember that when u use credit u r balancing convenience versus cost! If the whole world switches to using credit or debit instead of cash (as many countries seem to be doing), all prices will go up & Visa will laugh all the way to the bank!