A person use credit to make a purchase by making a promise to pay at some point in the future.
Credit is the trust that lets people give things (like goods, services or money) to other people in the hope they will repay later on.
For Example Dale has a watch worth $50, and Jade wants it. But Jade can't pay straight away, so Dale lets Jade have the watch on $50 credit.
Four Common Forms of Credit,
- Revolving Credit, This form of credit allows you to borrow money up to a certain amount.
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Charge Cards, the major difference between a credit card and a charge card is the credit card can carry a balance, whereas the charge card must be paid in full each month. If the balance is not paid on time and in full, penalty fees will be added. American Express is an example of a well-known charge card.
- Installment credit involves a set amount borrowed, a set monthly payment and a set time frame of repayment. Interest charges are pre-determined and calculated into the set monthly payments. Common forms of installment credit agreements are home mortgages and auto loans.
- Non-Installment or Service Credit,This form of credit allows the borrower to pay for a service, membership, etc. at a later date. Generally, payment is due the month following the service, and unpaid balances will incur a fee, interest, and/or penalty charges. Continued non-payment will result in service cancellation and can be reported to the credit bureau, affecting your credit score. Service or non-installment agreements are very common in our everyday life.
Hence the correct option is (c).makes a promise to pay at some point in the future.
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