This is the seventh Financial Planning Simulation Capstone Project installment as outlined in Module A located in the Learning Modules section. It is assumed that you do not currently have a credit card and will need to obtain one, and you will need to obtain a consumer loan to replace the furnace and central air conditioning units in the home that you purchased in the M$5$ Assignment: Major Purchases.

You will complete this discussion based on the types of credit and strategies for appropriate use, the process of obtaining and managing credit, and available options for obtaining a credit card and a consumer loan.

Respond to the following questions:

Discuss the types of credit and strategies for appropriate use by addressing the following:

Describe the difference between open account credit and a consumer loan. Next, provide an example of how a person could utilize each in connection with a purchase.

Distinguish between the following types of credit arrangements:

Bank credit card

Retail charge card

Line of credit

Explain the difference between a debit card and a credit card.

Provide two examples of an appropriate use of credit and two examples of an inappropriate use of credit.

Describe the process of obtaining and managing credit by addressing the following:

Assume that you are applying for a credit card and a consumer loan. Describe the purpose of the following items and give one example of the type of information related to each:

Credit application

Credit bureau report

FICO score

Describe the purpose and contents of a credit card monthly statement and how it could assist you in managing your credit.

Describe the purpose of the $$debt safety ratio$$ and its role in assisting you in managing credit. Include how this ratio is calculated and a percentage rate $($discussed in the textbook$)$ that would signify that you are in a strong credit position.

Explore available options for obtaining a credit card and a consumer loan by addressing the following:

Assume that you do not currently have a credit card and you are interested in selecting one. Visit creditcards.com, research cards that you believe are appropriate for your needs, and make your selection. Next, summarize your findings including your rationale for the credit score range used, the name of the card, the amount of fees $($if applicable$),$ the benefits of this card, and any potential disadvantages of this card.

Assume that you will need to borrow $$5,000$ over five years to replace the furnace and central air conditioning units in the home that you purchased in the M$5$ Assignment: Major Purchases. Visit the Bankrate Personal Loan Calculator and enter your loan amount, term, and annual income in the appropriate fields. It is acceptable to utilize the current interest provided by the site$$s calculator. Next, summarize your findings including the loan interest rate and the monthly loan payment.