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Lending Institutions
Financial institutes such as commmercial banks, savings and loan associations, credit unions and savings bank offer long-term loans. They loan specific amounts of money to people for stated purposes. The main advantage of a loan is that you can get the loan from a financial institute and buy the item from a different company. Loans can be used to pay for car, household improvements, vacations, educational expenses, medical bills, and more!
Consumer Finance Companies
Consumer finance companies specialize in loans to people who cannot get credit else where. Consumers may have problems borrowing from other sources if they do not have a steady jobs or if they have poor credit rating. The cost of a loan from a consumer finance company is higher than the cost of a loan from other sources, since this loan involves a greater risk. The interest rate a consumer finance company charges varies from state to state and can be more than 20 percent.
Charge Accounts
The three main types of charge accounts are: regular, revolving, and installment. Regular charge accounts require that people pay for a purchase in full within a certain period of time, normally between 25 or 30 days. Revolving charge accounts allow people to pay a portion of the smount owed each month. Installment charge accounts permit people to pay for costly items with equal installment payments. Big-ticket items are used to buy larger items because of their higher prices. Most charge accounts combine both regular and revolving features.
Credit Card Companies
Credit card companies issue cards that can also be used to buy goods and services on credit. The cards work like charge accounts. The companies earn money from the interest you pay. When you issue a credit card, credit card companies set a credit limit. Credit cards can be divided into three types: singlepurpose cards, multipurpose cards, and travel and entertainment cards. Singlepurpose cards can only be used to buy goods or services at the busimess that issued the card. They operate like a revolving charge accounts. Multipurpose cards are also called bank credit cards, because they are issued by banks. These cards may be used at many different stores, restaurants, and other businesses all over the world. MasterCard and Visa are examples of multipurpose credit cards. Travel and entertainment cards are offered by companies that specialize in the credit card business. American Express and Diners Club are examples of this type of card.
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