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Don’t have enough money for what you want to buy? Credit can be your friend and comes in a couple of different forms. Just remember that when you use credit, you go into debt and you will probably have to pay interest on what you borrow. Credit needs to be handled with care so it doesn’t become the Wil Wheaton to your Sheldon Cooper (your arch nemesis).

Common types of credit are:


  • Credit Card – a card that lets you use the bank’s money to pay for things. Usually there is an interest rate applied to your spending until you pay the amount back. You will usually have a minimum amount to pay back every month and you might have to pay an annual fee to have the card.
  • Loan – this is when the bank lends you money for a set period of time. There are a couple of different types of loans:
    • A personal loan (for things like a car, new fridge or uni expenses) is usually a smaller amount loaned over a shorter period of time like 1-7 years.
    • A home loan is usually a much bigger amount and is borrowed for longer, like 25-30 years. Loans have an interest rate applied to the amount you borrow until you pay it back. You will have a minimum repayment you need to make every month and may also have monthly or annual fees plus costs to set the loan up. 
  • Line of Credit – a line of credit is a pre-approved loan that is available for you to use when you need it. This can be in the form of a loan or can be attached to your transaction account. When it’s attached to your transaction account, it’s called an overdraft. When you have used up all of your money in the bank account, you automatically have access to the banks money in the line of credit. Like other credit options, you will be charged an interest rate for using the banks money until you pay it back and you will have a minimum payment you are required to make each month.
When you pay for things with credit (using the bank’s money) the bank charges you interest on the amount you spend until it is paid back.










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Any advice in this information is general and has been prepared without taking account of your particular objectives, financial situation or needs. Before you act on any advice you should consider whether it is appropriate for you. IMB Ltd trading as IMB Bank ABN 92 087 651 974 AFSL/Australian Credit Licence 237 391