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It doesn't mean "free money": credit is money you borrow that must be paid back!

When someone lends you money that must be paid back with interest, they have "extended you credit." Interest is the cost of borrowing money - it's the extra amount you pay back for getting and keeping the loan.

If you've already opened a bank account and you have a budget that you follow closely, then you're ready to start working with credit. It's a bad idea to get a credit card or loan without having a budget.

When you make payments on time, that information shows up on your credit report. If you miss a payment, you'll be charged late fees and late payments will show up on your credit report too. Your credit report follows you where ever you go and can affect your ability to get a home loan or vehicle financing, get student loans, or get a loan to start up a business. The best way to avoid getting into debt is to cut down the number of shop credit cards and bank credit cards you have. If you do have a credit card, don't take it with you when you go shopping unless you are specifically planning to use it, and have budgeted for it. Having a credit card handy makes it easier to 'impulse buy' and spend money you don't really have spare.

In South Africa, the National Credit Act protects your rights as a consumer. To find out more about your rights, read the NCR Brochure for consumers in English, Afrikaans or isiZulu.

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