Credit can be classified into two main types, installment, and revolving credit.

First we’ll learn about installment credit 💪

💡Installment credit = borrowing a fixed amount of money and repaying it in regular installments over a set period of time.

Let’s say you are buying a PS4. 🎮

Instead of paying all of the money upfront, some services let you pay the amount every month until you’ve paid the full price. 📅

Installment loans are often used for large purchases, such as a car or a house, or a brand-new PS4 🤑

Installment loans usually have fixed interest rates, meaning the amount you repay each month is the same each month. 💸

They also have a fixed amount of time or a “set term” for how long you’ll be paying off the loan ⌚

Although less common with digital installments, some installment loans have pre-payment penalties 🤯

This means you’re fined if you pay too early! 👀

So, installment credit is becoming more popular with online shopping services like Klarna and Afterpay 🚀

Now you know the details!