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credit 1

Introduction to credit

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credit 1

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  1. INTRODUCTION TO CREDIT

  2. Stone age

  3. Barter Is an act of trading goods or services between two or more parties without the use of money.

  4. Credit - From the Latin word creditummeansto trust - is a  contractual agreement in which a borrower receives something of value now and agrees to repay the lender at some later date.

  5. Who Gives Credit? • Creditors • Could be a • Bank • Credit union • Any business selling a product or service • The government • Credit card companies

  6. User of Credit Consumer use the credit for personal needs   Business It enables to obtain the capital that need to expand, cover day to day expenses, purchase inventory, hire additional staff and allows to conserve the cash on hand to cover cost of doing business ! Government In order to increase/obtain funding for government projects and spending !

  7. Foundations of Credit • Confidence • Proper Facilities • Stability of Monetary Standard • Government Assistance

  8. Cost of Credit Risk Interest Operating Expenses

  9. Advantages of Credit • Facilitates and contributes to the increase in wealth. • Saves time and expense. • Helps expand the purchasing power of every member of the business community from producer to the ultimate consumer. • Enables immediate consumption of goods thereby providing for an increase in material well-being

  10. Advantages of Credit • Helps expand economic opportunities . • Spreads progress to various sectors of economy • Makes possible the birth of new industries • Helps buying become more convenient for customers.

  11. Disadvantages of Credit • May require additional fees • Financial difficulties may arise if borrower loses track in paying • Increased impulse buying may occur • May lead to bankruptcy

  12. Can you Believe? • _____% of teenagers say they are pretty familiar with credit cards 5. _____% of teenagers have access to a parent’s credit card. 6. _____% of teenagers aged 18-19 already have a credit card in their own name. 56 9 31

  13. Reminders: • Briefer’s due date is on August 12, 2020 @ 12nn (Google Classroom) • Technical Instructions and PPT will be uploaded in Google Classroom.

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