What is credit purchase?
Credit purchase is where the buying party uses a credit card at the time of buying; this credit card acts as a promise of pay from the credit company. The credit card company then bills the card holder’s credit purchase .The charge usually includes the purchasing price added to service interest.
Step 1
This interest is charged for the service of the customer being allowed to at a later time than that required if it was a cash purchase. While normal cash purchase are recorded in cash books and entries, however with credit purchase the transaction is usually recorded in the party’s name.
Step 2
Requirements to use credit purchases
To start using credit purchases, there are some basic requirements that should be met, you should have a good credit history,age of 16 years or older and have the personal documentation. In a creditpurchase credit history is very important because it give your credit lenders a chance to evaluate you.
Step 3
The credit history will be used to establish you payment ability basing on your past credit records. From your credit history, a credit score will be generated and through your ratings, you will be allowed to make credit purchases. A good credit score is that of 600 and above.
Step 4
Age is a very important factor since you will be making financial transactions that will affect your financial state.Proper personal documentation such as identification cards is also required if you are to make any credit purchase applications. However, most credit card companies do not require you to provide identification when using your credit cards to make payments.
Step 5
Advantages of making credit purchases
Credit purchase gives you some form of purchase power and also theyease the buying process, since they reduce the hustle of walking around with lots of money. Credit purchases also offer you additional cover for the good bought, if for example the bought item gets lost or spoiled.
Creating a good credit history is also dependent on how much credit you use; with proper use of your credit purchases you can improve your credit score and ratings.In case of emergencies a credit purchase can be very handy, since it will avail you with resources that you require urgently at that time. Finally, use of credit purchase also enlists you to the offers and benefits in certain stores and shops.
8 tips for credit purchases
Credit purchase can make life easier if well used, but with improper use it can become a very huge financial burden, here are some few tips to help you:Try and keep track of all the credit purchases you make, Try and spend within your budget, never loan your credit card or give out your credit information details, in case you lose your credit card, report to your card company. Always check your statements monthly to ensure that the charges present are yours. Finally, try and use one card company if possible, so as to avoid overspending that might fully cut you out of making credit purchases.
