Using Credit Carefully
Build progressive financial capability through using credit carefully, moving from understanding to confident application.
5
Lessons in this module
Credit Is Borrowed Money
Explain that credit is borrowed money that must be repaid with interest — and that the cost of borrowing must be understood and affordable before any credit facility is used.
Interest Changes the Total
Calculate the total repayment on a loan by applying compound interest over the repayment period — and use that total to understand the true cost of borrowing.
Minimum Payments Take Longer
Minimum credit-card payments cover mostly interest and barely reduce the principal, so the balance lingers for years and the total repaid can exceed the original debt. Paying above the minimum is what actually clears it.
Late Payments Have Consequences
A missed payment costs twice: an immediate late fee and a negative mark on the credit record that can raise borrowing costs for years. Automating at least the minimum payment prevents both.
Borrow Only With a Repayment Plan
Explain why a repayment plan must be calculated and confirmed as affordable before any borrowing decision is made — using income, expenses, and the total monthly repayment figure.
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