Transcript Credit PPT

1.6.1.G1
Take Charge of
Credit Cards
Introductory Level
© Take Charge Today – November 2010 – Take Charge of Credit Cards – Slide 1
Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences at the University of Arizona
1.6.1.G1
What is Credit?
Credit- something is received in exchange for a
promise to pay back money in the future
Borrower
Lender
Requests
credit from
lender
Gives borrower credit
if they believe money
will be paid back
Borrower
Borrower
Receives goods,
services, or money
Pays back money
PLUS interest to
lender
Statistic 1
© Take Charge Today – November 2010 – Take Charge of Credit Cards – Slide 2
Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences at the University of Arizona
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What is Interest?
Interest is the price of money
When referring to credit, interest is the
charge for borrowing money
© Take Charge Today – November 2010 – Take Charge of Credit Cards – Slide 3
Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences at the University of Arizona
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What is a Credit Card?
Plastic card that holds pre-approved credit
Purchase items now
Pay later
Credit Limit- maximum amount of
money that can be charged on the card
© Take Charge Today – November 2010 – Take Charge of Credit Cards – Slide 4
Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences at the University of Arizona
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Credit Card Payments
Pay total amount
owed
OR
Make smaller
payments- equal or
unequal
Minimum Payment- minimum
amount of a credit card bill that
must be paid every month
What do you think is the best payment option?
© Take Charge Today – November 2010 – Take Charge of Credit Cards – Slide 5
Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences at the University of Arizona
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Credit Card Interest
Charged
Known as
Each month the amount of money owed is not
paid in full
Annual percentage rate (APR)- interest rate
charged on a credit card Statistic 2 & 3
The lower the APR the
better for cardholder!
10%
APR
© Take Charge Today – November 2010 – Take Charge of Credit Cards – Slide 6
Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences at the University of Arizona
15%
APR
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What if only the minimum
payment is made every month?
Melissa and Skylar each purchased a plane ticket for $500 using
their credit cards that charge 15% APR
MelissaPayment
Skylar-
Paid the full Paid the minimum payment dueamount owed$20
$500
Time to pay off credit card
Total amount of interest paid
Total amount paid
1 month
3 years
$0
$104
$500
$604
If a credit card is paid in full every month, no interest is paid!
Statistic 4
© Take Charge Today – November 2010 – Take Charge of Credit Cards – Slide 7
Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences at the University of Arizona
1.6.1.G1
What is the difference between
credit cards and debit cards?
Debit Card - plastic card
that is electronically
connected to an account
that holds cardholder’s
money
Credit Card
Debit Card
Money is borrowed
and paid back later
Money is immediately
taken out of an
account
Not connected to
an account
Connected to an
account that holds
cardholder’s money
© Take Charge Today – November 2010 – Take Charge of Credit Cards – Slide 8
Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences at the University of Arizona
How do you get a
credit card?
1.
2.
Examine credit card offers
• Displays main costs of a potential
credit card
Complete an application
© Take Charge Today – November 2010 – Take Charge of Credit Cards – Slide 9
Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences at the University of Arizona
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Getting a Credit CardRestrictions
Must be at least 21 years old
UNLESS
Show proof of
sufficient income
Have a co-signer
If someone agrees to be a co-signer on an account, they are equally
responsible for the loan
© Take Charge Today – November 2010 – Take Charge of Credit Cards – Slide 10
Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences at the University of Arizona
What are the advantages and
disadvantages to using a
credit card?
Advantages
• Convenient
• Useful for emergencies
• Often required to hold a
reservation
• Purchase expensive items
earlier
• Possibility of receiving
bonuses, such as frequent flyer
miles and cash rebates
Disadvantages
• Paying interest if balance is kept
on card
• Additional fees may apply if
card is not used properly
• Tempting to overspend
• Responsible for lost/stolen
cards
• Risk of identity theft
• Statistic 5
© Take Charge Today – November 2010 – Take Charge of Credit Cards – Slide 11
Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences at the University of Arizona
1.6.1.G1
Responsible Credit
Card Use
Do
• Pay amount charged in full
every month
• Pay payments on time
• Keep track of charges by
keeping receipts
• Check monthly credit card
statement for errors
Don’t
• Make late payments
• Pay only the minimum
payment due
• Go over the credit limit
• Charge items that can’t be paid
off within the month
© Take Charge Today – November 2010 – Take Charge of Credit Cards – Slide 12
Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences at the University of Arizona
1.6.1.G1
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What happens when a credit
card is used irresponsibly?
Late Payment
Fee
• Charged when
minimum
payment is not
made by due
date
Over-the-Limit
Fee
• Charged if the
amount of
transactions
goes over credit
limit
Penalty APR
• Higher interest
rate charged on
new transactions
• Statistic 6 & 7
© Take Charge Today – November 2010 – Take Charge of Credit Cards – Slide 13
Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences at the University of Arizona
What is a Credit
Card Statement?
Purpose
• Summarizes important information from previous month
Includes
•
•
•
•
Transactions made
Amount owed
Minimum payment
Payment due date (date minimum payment is due)
Why is it important to examine a credit card statement?
© Take Charge Today – November 2010 – Take Charge of Credit Cards – Slide 14
Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences at the University of Arizona
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Credit Card
Safety Tips
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It is important to keep credit cards and credit card information secure to avoid
someone else making charges
If a credit card is closed,
notify the company in
writing and by phone,
then cut up card
Sign back of card with
signature and “Please See
I.D.”
Never give out a card
number unless making
purchases
Do not leave cards lying
around
© Take Charge Today – November 2010 – Take Charge of Credit Cards – Slide 15
Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences at the University of Arizona
Credit Card
Safety Tips
Lost or stolen card
should be reported
immediately to the
credit card company
Keep a list of all cards,
account numbers, and
phone numbers separate
from cards
Shred any credit card
offers received
Check credit card
statements for false
charges; report any false
charges immediately
Immediately reporting a lost or stolen credit card reduces the cardholder’s liability for
any possible fraudulent purchases
© Take Charge Today – November 2010 – Take Charge of Credit Cards – Slide 16
Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences at the University of Arizona
1.6.1.G1
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Summary
What is a credit card?
• Plastic card that holds pre-approved credit
• Used for the purchase of items now and payment of them later
How can you avoid paying interest on a credit card?
Pay the credit card balance in full every month!
What is the difference between a credit card and a debit card?
• Debit card- money is taken from the cardholder’s account
• Credit card- money is borrowed and paid back later
© Take Charge Today – November 2010 – Take Charge of Credit Cards – Slide 17
Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences at the University of Arizona
1.6.1.G1
Remember….
• If a credit card is used properly it can
offer many benefits
• Important to keep credit cards and
credit card information secure
• Use a credit card responsibly! Only
charge items when there is no doubt
about ability to pay off the charges
© Take Charge Today – November 2010 – Take Charge of Credit Cards – Slide 18
Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences at the University of Arizona