Transcript Chapter 18 Responsibilities and Costs of Credit

Chapter 18
Responsibilities and
Costs of Credit
Using Credit Responsibly
Analyzing and Computing Credit
Costs
© South-Western Educational Publishing
Lesson 18.1
Using Credit Responsibly
GOALS
 Describe the responsibilities of
consumer credit.
 Discuss how to protect your credit
card from fraud.
 Explain how you can reduce or
avoid credit costs.
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Protecting Yourself
from Credit Card Fraud
Safeguarding Your Cards
 Sign cards immediately.
 Carry only cards you need.
 Keep a list of cards and information about them.
 Notify creditors when cards are lost or stolen.
 Watch card during transactions.
 Tear up any carbons.
 Do not lend cards or leave them lying around.
 Destroy expired cards.
 Don’t give credit card information by phone to people or
businesses you do not know.
 Keep receipts and verify charges on statements.
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Protecting Yourself
from Credit Card Fraud
Protecting Your Cards Online
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Avoiding Unnecessary
Credit Costs
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Lesson 18.2
Analyzing and
Computing Credit Costs
GOALS
 Explain why credit costs vary.
 Compute and explain simple interest
and APR.
 Compare methods of computing finance
charges on revolving credit.
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Why Credit Costs Vary
 Source of credit
 Total amount financed
 Length of time you are making payments
 Ability to repay debt
 Type of credit selected
 Collateral (generally have a fixed interest rate)
 Prime rate (interest rate that banks offer to
their best business customers)
 Economic conditions
 Business’s cost of providing credit
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Computing the
Cost of Credit
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Simple Interest Formula
IPRT
I =
P=
R=
T=
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Annual Percentage
Rate Formula
2nf
APR 
P (N  1)
n=
f =
P=
N=
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Credit Card
Billing Statements
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