From renting a car to reserving an airline ticket or hotel room, credit cards have become a necessary convenience. However, using credit wisely is critical to building a solid credit history and maintaining fiscal fitness.

Types and sources of credit

Single-payment credit
Items and services are paid for in a single payment, within a given time period, after the purchase. Interest is usually not charged.

Installment credit
Merchandise and services are paid for in two or more regularly scheduled payments of a set amount. Interest is included. A repayment plan is drawn up in the form of a conditional sales contract based upon fulfilling a number of conditions of the contract.

Consumer loans
Money may also be loaned for a special purpose, with the consumer agreeing to repay the debt in regularly scheduled payments.

Revolving credit
Many items can be bought using this plan as long as the total amount does not go over the credit user's assigned dollar limit. Repayment is made at regular time intervals for any amount at or above the minimum required amount. Interest is charged on the remaining balance.