Copyright Goodheart-Willcox Co., Inc.
Chapter 8 Consumer Services 221
data. Anyone using electronic banking should
take great care to keep account numbers, IDs,
and passwords protected. Passwords should also
be changed regularly.
Using Credit Wisely
Using credit involves buying or borrowing
now and paying later. People use credit for many
reasons. They might use credit to meet personal
expenses, purchase a consumer good, fi nance
an education, or buy a car or house. Several
different types of credit are available, depending
on a person’s needs. These include installment
credit, noninstallment credit, and revolving
credit.
Installment credit is a cash loan repaid with
interest in equal, regular payments. Installment
credit may be obtained from a number of
sources. These include fi nancial institutions and
mortgage and credit card companies. This type
of credit is typically used for larger purchases,
such as a car or home.
Student loans are another form of
installment credit. These loans can offer students
more affordable payments for higher education
costs. Payments start immediately after the
education is completed. This may come at a
diffi cult time, when graduates are just starting to
establish themselves or having trouble fi nding employment. These
loans must be repaid, however, and cannot be defaulted (failed to pay).
If a person defaults on a federal student loan (which is the most
common form of student loan), there are serious consequences
(Figure 8.19).
Similar to installment credit, in which payments are made and
interest charges are assessed, noninstallment credit is offered by a
fi nancial institution or merchant to a consumer. The major difference is
that, with noninstallment credit, the entire balance is expected to be paid
at once on a short-term loan—generally in one month. Interest may or
may not be charged on noninstallment credit.
Most credit cards are a form of revolving credit. The lender
determines a credit line, or maximum amount of credit offered. The
consumer uses the revolving credit line throughout a month to make
purchases. A month-end statement is sent to the consumer. He or she
must pay some or all of the balance. The loan amount at any moment,
then, is not fi xed. It revolves around the amount purchased and payments
made.
Bloomua/Shutterstock.com
Figure 8.18 Many banks now provide options for
mobile banking, making electronic banking even more
convenient. Does your bank offer a mobile banking
app?