What Is a Credit Note?

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A credit note is an agreement that allows an individual to purchase a product for a set price at some point in the future. Get a copy of the prospectus or loan agreement before getting involved in credit notes with advice from a financial adviser in this free video on investing and money management.

Part of the Video Series: Investments & Money Management Tips
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Video Transcript

Have you ever gone to your favorite retailer looking for a specific item and found a blank spot on the shelf? Hi, this is Roger Groh at Groh Asset Management. Frequently they will give you a rainy day coupon which means that they give you the right to buy that product at that price at some point in the future. That's really a credit note in a technical sense. It can go from being little teeny tiny one off items to being entire inventories for larger businesses. Does it matter? You bet! Because if you believe that there would be higher prices up the road. Even if you don't purchase something the value of that note would go up to reflect the differential between today's price and tomorrows. Is there a value if prices go down? Probably not. They would expire worthless. Because you would be better off just buying off the shelf at the cheaper price. Like all credit notes though you need to understand the terms of each note. How do you do that? Get a copy of the prospectus or the copy of the loan agreement. Go through it thoroughly. If you don't understand it give it to your lawyer, have them review it, write you a summary and then explain it to you before you make any deal. Hope that helps. Go get those rainy day coupons. I'm Roger Groh with Groh Asset Management. Thank you very much for spending time with me.


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