Transcript Two Ways to Pay for a $1600 Refrigerator

Consumer Credit Counseling Service
of Southern Oregon, Inc
www.cccsso.org
Ashland High School
November 18
What Is Interest?
Interest is what you pay for the privilege of
using someone else’s money.
 Interest is also paid to you by a financial
institution to use your funds.

But I’m still in High School!
Right now you have a clean slate
 The best time to prevent debt is now
 Knowing how credit cards, car loans,
mortgages, and savings work will help you
make better decisions in the future

Wal-mart Television: A
Wal-mart has a color television on sale for
$300.00
 The salesperson says you can take home
the television now.
 You have to make a payment of $25.00
per month
 You have to pay 24% interest to Wal-mart
to take home your TV now.

Wal-Mart Television A
Pay
Interest
Principal
Balance
1st month
$ 25.00
$ 6.00
$ 19.00
$ 281.00
2nd month
$ 25.00
$ 5.62
$ 19.38
$ 261.62
3rd month
$ 25.00
$ 5.23
$ 19.77
$ 241.85
4th month
$ 25.00
$ 4.84
$ 20.16
$ 221.69
……………
……………
……………
……………
……………
13th month
$ 25.00
$ .90
$ 24.10
$ 21.07
Totals
$ 346.07
$ 46.07
Wal-mart Television: B
Wal-mart has a color television on sale for
$300.00
 You want to save $25.00 per month
towards buying a $300.00 TV.
 Your bank will pay you 2% interest
on your savings account

Wal-Mart Television B
Beginning
You Pay
Old
Balance
The Bank’s New
Balance
1st month
$ 0.00
$ 25.00
$ 25.00
$ 0.50
$ 25.50
2nd month
$ 25.50
$ 25.00
$ 50.50
$ 1.01
$ 51.51
3rd month
$ 51.51
$ 25.00
$ 76.51
$ 1.53
$ 78.04
4th month
$ 78.04
$ 25.00
$ 103.04
$ 2.06
$ 105.10
……………
…………
………
…………
…………
…………
$ 279.22
$ 25.00
$ 304.22
$ 6.08
$ 310.30
11th month
Best Buy’s Credit Card Offer
• Apple® - iPod touch® 64GB* MP3
Player (4th Generation - Latest
Model) – Black
• $399.99
• 18 Months .. No interest Plan
No Interest storewide on all purchases if paid in full within 18 months
Interest will be charged to your account from the purchase date if the purchase balance is
not paid in full within 18 months or if you make a late payment. Minimum total purchase of
$249 required. Required minimum payments is greater of $10 or 1% of balance, plus billed
interest charges, plus any late fees, or it can also be 2.5% of balance if card issued by Chase.
Online and in-store offers may vary.
HSBC Financing Info:
On approved purchases on the Best Buy consumer credit card by HSBC Bank Nevada, N.A.
Min. interest charge = $2. Certain rules apply to the allocation of payments and interest
charges on your promotional purchase if you make more than one purchase on your credit
card. Call 1-888-367-4310 or review your cardholder agreement for further information.
HSBC Deferred Interest Info Variable APRs as of 10/01/2010:
Plan A: For Accounts generated on or after 06/29/10: Variable Standard Rate APR: 25.24%.
Variable Penalty Rate APR: 29.99%. For Accounts generated before 06/29/10: Variable
Standard Rate is 24.24%. Variable Penalty Rate is 29.24%.
Plan B: Variable Standard APR: 27.99%. Variable Penalty APR: 29.99%.
Best Buy iTouch….
No Interest storewide on all purchases if
paid in full within 18 months
 Interest will be charged to your account
from the purchase date if the purchase
balance is not paid in full within 18 months
or if you make a late payment.
 Variable Penalty Rate APR: 29.99%.

Best Buy iTouch
The way you hope it works
1st
2nd
3rd
………
17th
18th
Balance
Payment
$ 399.99
$ 377.99
$ 355.99
…………………………
$ 47.99
$ 25.99
$ 22.00
$ 22.00
$ 22.00
………………
$ 22.00
$ 25.99
New
Balance
$ 377.99
$ 355.99
$ 333.99
………………
$ 25.99
$ 0.00
Best Buy iTouch
The way it most likely will happen
Balance
1st
2nd
3rd
…………
18th
24th
25th
Totals
$ 399.99
$ 387.99
$ 375.69
…………
$ 149.61
$ 32.97
$ 11.79
Payment
2.5% Int. New Balance
$ 22.00 $ 10.00
$ 387.99
$ 22.00
$ 9.70
$ 375.69
$ 22.00
$ 9.39
$ 363.08
…………… ………… …………………
$ 22.00
$ 3.74
$ 131.35
$ 22.00
$ 0.82
$ 11.79
$ 11.79
$ 0.00
$ 0.00
$ 539.79 $ 139.80
40” Flat Screen TV




The flat screen costs $1800
Sears is letting you take home the TV
They are charging you 18% interest
You have to pay a minimum of 2.5% of the balance
per month, with a minimum payment of $10.00
Month
1st
2nd
3rd
Min Pay
$ 45.00
$ 44.55
$ 44.10
Int. Paid
$ 27.00
$ 26.73
$ 26.46
Prin. Paid
$ 18.00
$ 17.82
$ 17.64
Balance
$ 1,782
$1764.18
$1746.54
40” Flat Screen Continued
Month
Min Pay
Int. Paid
Prin. Paid Balance
209th
$ 10.00
$ 0.46
$ 9.54
$ 21.43
210th
$ 10.00
$ 0.32
$ 9.68
$ 11.75
211th
$ 10.00
$ 0.18
$ 9.82
$ 1.93
212th
$ 1.93
$ 0.00
$ 1.96
$ 0.00
• 212 Months is equal to 17 years 9 months
• Your 40” television cost $1800
• The interest you paid to Sears is: $2,315.32
• The total coast of your television was:
$4,115.32
Your Credit Card Statement
Balance
Due
Minimum
Payment
Interest
Rate
Time to
Pay Off
Total Cost
of
Purchase
$1800
$45.00
18%
18 Year
$4100
What is a credit score?
A number that tells people lending you money
how safe it is to do that
 A number used to determine whether to rent
you an apartment
 Employers are looking at people’s credit
scores to see how they manage their own
money.

How do you get a good Credit Score?
• Pay your bills on time
• When you borrow money, pay it back promptly
• Don’t borrow more money than you can comfortably
pay back
How do you get a bad score?
• Miss payments entirely
• Make payments that are less than agreed
• Make payments later than agreed
• Spend more than the banks let you
Auto Class 101
Buying a $12,000 SUV
 You have saved $ 2,000 towards to down
payment
 You have to finance $10,000 to buy the
car

Auto Class 101
The Terms: 5 Year Loan
Amt
Financed
Interest
Rate
Monthly
Pay
Total
Interest
Total
Payments
$10,000
$10,000
$10,000
6.5%
12.00%
18.00%
$ 168.10
$ 195.50
$ 228.08
$ 2,103.15
$ 4,076.14
$ 6,421.61
$ 12,103
$ 14,076
$ 16,422
$10,000
24.00%
$ 263.27
$ 8,955.32
$ 18,955
A Higher FICO Score
Saves You Money
30 Year Mortgage
Loan Amount $200,000
FICO
Score
APR*
760-850
700-759
640-659
620-639
4.47%
4.69%
5.52%
6.08%
Monthly
Payment
$
$
$
$
1,010
1,034
1,139
1,209
Total Int.
Paid
$163,600
Money
Saved
******
$173,320 $ 9,720
$210,040 $ 46,400
$235,240 $ 71,640
Please fill out the evaluation
 We appreciate the input
 Thanks….. And Go Grizz

541-779-2273
www.cccsso.org