Transcript Are You Credit Wise? Presentation (PPT - 1.08MB)

Did You Know…
It can take as many as
5 years to repay a credit card
balance of $1000 when you
make only the minimum
payment each month?
Your
Your Money
Money
Budgets
Managing Credit and Debt
Credit Reports
It’s True…
Repeatedly making minimum
payments will increase the amount
of time it takes to repay your credit
card debt and cost you more
money in interest charges.
Your
Your Money
Money
Budgets
Managing Credit and Debt
Credit Reports
Do You…
Pay bills late or skip payments?
Bounce checks or overdraw your account?
Take extra jobs to pay your credit card bills?
Use one credit card to pay off another?
Call parents to help pay for credit card bills?
Your
Your Money
Money
Budgets
Managing Credit and Debt
Credit Reports
If You…
answered YES to any of these questions,
you should consider making changes to
better manage your money.
Your
Your Money
Money
Budgets
Managing Credit and Debt
Credit Reports
Your
Money
Budgets
Managing Credit and Debt
Credit Reports
Are You Credit Wise?
• Understanding credit means you
understand money.
• Using a credit card means you have been loaned
money to make a purchase.
• Credit cards offer • Convenience
• Payment in emergencies
• Protection
• They should NOT be used regularly for purchases
you can’t afford.
Learn to Master Your Money
DON’T . . .
• Be shocked by your credit card statement.
• Avoid reading your credit card statement.
• Avoid phone calls for payment.
• Regularly ignore one bill to pay another.
• Use one credit card to make a payment on
another card.
Master Your Money
DO . . .
• Know how much money you have.
• Know where you are spending it.
• Know how much you can set aside for savings.
• Create and follow a budget to help manage
monthly cash flow.
The Price is Right!!!
?
Original Price $500
20% off $400
$614.52
• It’s on SALE!! But is it a deal?
• You charge the coat to a credit card with
18% interest.
• Paying only the minimum payment each
month would take 5 years to repay.
Budgets
Your Money
Managing Credit and Debt
Credit Reports
Budgeting is Basic Math…
• Write down your monthly income
(take-home pay) after taxes (be sure to
include scholarships, money from parents,
loans).
• Subtract all expenses:
– Include EVERYTHING.
– Analyze your habits.
– Take notes for a week on all purchases.
– Don’t forget to pay yourself. Reserving funds for
emergencies and special purchases is a good idea.
It’s a Balancing Act …
Budgeting Tips
• Balance your budget.
• Cut expenses to make your budget work.
• Do NOT charge items to your credit card to
makeup the difference.
• Keep track of all of your checks written, bank
fees, ATM withdrawals, etc.
Finding Extra Money
• Needs vs. Wants
– Do I need to eat out as
often as I do?
– Do I need new clothes or
do I want to buy new
clothes because they are
on sale?
– Do I need to shop at
convenience stores and
pay higher prices?
?
It All Adds Up...
If you spend $3.50 on coffee every weekday…
• In a 5 day work week,
you’ll spend $17.50.
?
• During the month,
you’ll spend over $70.
• Over a year, that totals $840 in coffee.
Managing
Credit
and Debt
Your
Your Money
Money
Budgets
Credit Reports
Credit Card Basics
• Pay more than the minimum due on credit card
debt - you’ll reduce the time it takes to repay your
credit card debt and save money by paying less
interest.
• Call the credit card issuer if you anticipate being
late.
• Do not miss a payment or pay late because fees
and additional interest will be charged.
• Do not exceed the credit card limit.
• Know your interest rate.
Credit Card Basics
• A credit card statement arrives every month,
listing all charges and payments.
• Understand that cash advances may cost you a
fee and a higher interest rate.
• Compare offers to determine which card offers
you the best interest rate (also referred to as APR
or finance charges).
Credit
Reports
Your
Your Money
Money
Budgets
Managing Credit and Debt
Your Credit Score
• Credit score is an evaluation of a person’s credit
worthiness. Think of it as a financial version of
your college grade transcript.
• Credit scores change overtime.
• Scores range from about 350 to more than 800.
• Lenders review your credit report to determine if
you are a good risk. Consumers with the best
credit history get the best interest rates.
A Negative Credit History
• Late payments, nonpayment and exceeding credit
limits can stay on credit reports for 7 years.
• Bankruptcy can stay on your credit report for
7 to 10 years.
• A poor credit history can:
– Hurt your chances of renting an apartment or buying a
house.
– Prevent you from being approved for a car loan or
business loan.
– Affect your chances of getting some jobs.
Your Credit History
Tips on Improving Your Score
• Pay bills on time.
• Missed a payment? Get current and stay current.
• Keep balances low on credit cards and other
revolving credit.
• Pay off debt rather than move it around.
• Don’t close unused credit cards as a short term
strategy.
• Don’t open unnecessary lines of credit.
• It’s okay to request and check your own score.
Credit Report Best Practices
• Order a copy and review your credit report annually.
• Beware of credit repair companies offering to “erase”
negative credit information.
• Dispute errors:
• Make a copy of your credit report and mark items you suspect
are incorrect.
• Write a letter to the reporting agency and explain the disputed
items.
• Request an investigation and send copies of supporting
documents.
• Tell the creditor in writing that you dispute an item.
• Keep copies of all correspondence.
Protect Your Credit
• Never give your card number to anyone unless
you are making a purchase or a reservation.
• Before making purchases online, check the
merchant’s security protection.
• If your card becomes lost or stolen, contact the
issuing bank or financial institution immediately.
• Before you move, provide your new address to
the card issuer in writing.
Get Your Credit Report
You’re entitled to one free credit report each year:
• Annual Credit Report – www.annualcreditreport.com
Major credit bureaus:
• Equifax – www.equifax.com
• Experian – www.experian.com
• Trans Union – www.transunion.com
• MyFico – www.myfico.com
Be Credit Wise!
• Budgeting
– Don’t buy what you can’t afford.
– Watch where and what you spend $$ on.
• Credit Cards
– Pay more than the minimum payment.
– Don’t miss payments.
– Know your interest rates and compare.
• Credit Reports
– CHECK yours for FREE once a year.
Are You Credit Wise?
More information on credit and money
management at:
www.areyoucreditwise.com