Ohio State University Extension/Research

Manage Your Money

Lesson 4: How Much Credit Can You Afford?

MYM-4-03

Consumer credit is a way of using future income to buy the goods and services you want today. Consumer credit can be obtained from a variety of sources including banks, credit unions, finance companies, many retailers, and service providers such as utility companies and physicians. In addition, some investors may be able to tap their investment accounts or retirement accounts. Policyholders who have a cash-value life insurance policy can obtain loans based on the cash value built up in the policy. Pawnshops, check cashers, and rapid-refund services are some of the "alternative lenders" that extend credit.

When used wisely, credit can be a valuable financial tool. It is often more convenient to use and easier to carry than cash. Credit also offers some valuable consumer protections. However, when used carelessly, credit can cause serious financial problems. You could owe more than you can repay and damage your credit rating.

Types of Credit

Do You Want to Use Credit?

Credit History

How Do You Establish Credit?

Choosing a Credit Card

Can I Afford to Use More Credit?

Recognizing and Dealing with
Credit Problems

Avoid Credit Card Blues

All Plastic Is Not Credit

Purchasing Options

Be Credit Wise

Action Steps for Lesson 4

For More Information on
Consumer Credit

Click here for the PDF version of this Lesson.

Written by Ella Mae Bard, Extension Agent in Family & Consumer Sciences, Knox Co., Carolyn McKinney, Family Resource Management Specialist, Consumer & Textile Sciences Dept., Nancy Hudson, Northeast District Family & Consumer Sciences Specialist, and Diane Johnson, Extension Agent in Family & Consumer Sciences, Darke Co., Ohio State University Extension. Portions adapted from "Managing Your Money," prepared (1994, 1996) by Eleanor Ames, former OSU Extension Agent (Madison Co.) in Family & Consumer Sciences.

For more information about family life issues, visit http://families.osu.edu

Manage Your Money is a six-part self-study course. The lessons include:
  1. Getting Started
  2. Where Does Your Money Go?
  3. Stop Spending Leaks
  1. How Much Credit Can You Afford?
  2. Develop Your Budget
  3. Your Net Worth and Financial Records

Appreciation is expressed to Marjorie McCullough, Office Associate, Consumer and Textile Sciences Department, who worked with several drafts of these materials.

This material is intended only for educational purposes. Mention of a proprietary product, trademark or commercial firm in text or figures does not constitute endorsement by Ohio State University Extension and does not imply approval to the exclusion of other products, firms, or organizations. For specific, consult your financial or legal adviser.

All educational programs conducted by Ohio State University Extension are available to clientele on a nondiscriminatory basis without regard to race, color, creed, religion, sexual orientation, national origin, gender, age, disability or Vietnam-era veteran status.

Keith L. Smith, Associate Vice President for Ag. Adm. and Director, OSU Extension.

TDD No. 800-589-8292 (Ohio only) or 614-292-1868