Your Personal Finance: Credit Cards, Loans, Savings & Budgeting



Understanding Personal Finance

Having a credit card can be a great plus if you’re in need of some quick cash, you have to make an emergency purchase, or you just want to buy a large ticket item that you cannot afford to pay for all at one time. People who own credit cards should be very conscious of the different aspects and responsibilities that come with using them. Understanding the many terms associated with a credit card is essential to being able to handle using them and to maintain and stay within a budget. By learning more about credit and personal finance, you can better manage your money and help to keep your debt down.

Credit Card

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A credit card is a line of credit granted to an individual person, allowing them to make purchases or pay bills. Credit cards come with an annual interest rate, which is charged monthly based on the credit holder’s balance total. Owning a credit card is a good way to establish overall credit, and to be able to have spending flexibility. The downside of credit cards is that people may be tempted to spend more than they can pay off, or spend too much and keep a high balance, which makes credit cards a potentially dangerous credit-related item.

  • Credit – Credit is a dollar amount that is granted to a borrower based on the creditor’s assessment of the borrower’s ability to repay any debt they create borrowed against that particular amount of credit.
  • Annual percentage rate – Also referred to as APR, an annual percentage rate is the rate at which interest is charged by the credit card company to the borrower per annum, or year.
  • Finance charge – A finance charge is a fee charged to the customer in order for them to be able to use a credit card or other type of credit. These charges vary per lender, and are usually subject to change at any time at the lender’s discretion.

Loan vs. credit

A loan is referred to as secured debt, while credit is typically unsecured. Loans are secured because the creditor is typically offering credit in order to purchase a certain item such as a car or home. Loans can also be repaid at a set monthly payment instead of a minimum amount that can change each month like credit card payments. A loan is also usually given to the borrower in one lump sum, up front and can be used as needed to make large purchases or pay off other debt. You can also often opt to repay it at a later date, and not have to pay it monthly like credit cards, depending on the terms.

  • Loan – A lump total sum of money granted to a borrower that can then be repaid in various increments until paid off in full.
  • Debt – Debt is essentially any money borrowed by one person, and owed to another person, corporation, or institution.
  • Loan Note – A legal document binding the borrower to the debtor that holds them accountable to repay the loan in full by law.
  • Variable interest rate – A variable interest rate is subject to change and the rate can increase or decrease based upon the lender’s decision, making them riskier than fixed interest rates.


Sticking to a budget can help you plan ahead when you’re facing credit card debt or loan repayments. Understanding where your money goes each month is the key to ensuring that you’ll be able to make your payments and eliminate debt over time. Learn about the differences in balance totals, and how much money is spent on principal versus interest each month. Once you do this, you can better determine how and when to pay back your debt to various creditors.

  • Budget – A budget is a set amount of money that someone has to pay bills within a certain timeframe or period.
  • Principal balance – This is the amount of money owed not including any interest or finance charges.
  • Interest balance – The interest balance is the amount of money owed that consists of interest accrued on the line of credit or loan over time as it remains unpaid.
  • Expenditure – The amount of money spent each month on anything other than loans or debt. This can be towards utilities, food, clothing, and other living expenses.


Planning for retirement is essential to ensuring you have enough money to live and enjoy your later years. It’s also a good way to build a future nest egg in case of emergencies, plan a big vacation, and save money to leave your children or other family members in the event of your death. By planning your retirement as early as possible, you’ll save more in the long run and collect interest on your investments at the same time.

  • 401k plan – This is a savings plan usually offered by employers that creates a portfolio of investments, usually a mixture of stocks and IRAs along with possible company contributions.
  • Social Security Act –A government-run plan designed to give money back to working Americans when they retire in the form of Social Security checks
  • Master pension plan – Any private retirement plan dictated to the employee by the employer/company that provides various benefits upon retirement including severance pay and other benefits.
  • Fully vested – This is any person’s right to particular employee benefits as owed to them from their employer once earned.