banking and credit cards. fees atm fee- charge for using atm services from a different bank atm fee-...

Banking and Credit Banking and Credit CardsCards

FeesFees ATM Fee- ATM Fee- charge for using ATM services charge for using ATM services

from a different bankfrom a different bank

Stop payment fee- Stop payment fee- used when a check is used when a check is lost or stolenlost or stolen

Transaction fee- Transaction fee- charge for every charge for every transaction over the allowed limit transaction over the allowed limit

Overdraft fee/Return item fee Overdraft fee/Return item fee – charge for – charge for overdrawing your accountoverdrawing your account

Fees & TermsFees & Terms

Loose coin fee- Loose coin fee- charge for depositing charge for depositing loose changeloose change

Electronic wire- Electronic wire- bank will bank will electronically transfer collected funds electronically transfer collected funds to another accountto another account

EFT- Electronic Funds Transfer- EFT- Electronic Funds Transfer- any any transaction recorded electronicallytransaction recorded electronically

Types of AccountsTypes of Accounts

CheckingChecking- funds are taken out using - funds are taken out using checks, ATMs, debit cards and in checks, ATMs, debit cards and in person (does not earn interest)person (does not earn interest)

SavingsSavings- deposit money where it - deposit money where it earns interest (bank can change the earns interest (bank can change the interest rate)interest rate)

Checking AccountChecking Account

Write a check to PSE&G for utilities in Write a check to PSE&G for utilities in the amount of $54.78the amount of $54.78

Write a check out to Commerce Bank Write a check out to Commerce Bank for a car payment for $495.95for a car payment for $495.95

PSE&G for utilities- $54.78PSE&G for utilities- $54.78 Commerce Bank for a car payment- Commerce Bank for a car payment-

$495.95$495.95

725.0054.78PSE&G 9/19 54.7

82670

Types of AccountsTypes of Accounts

Certificates of DepositCertificates of Deposit (CDs)- earn a fixed (CDs)- earn a fixed interest rate for a certain period of time interest rate for a certain period of time with a penalty for early withdrawalwith a penalty for early withdrawal

Money MarketMoney Market- like a savings account, - like a savings account, interest rate usually increases at balanced interest rate usually increases at balanced levels, requires a levels, requires a minimum balance and minimum balance and limits withdrawals limits withdrawals

P. 33P. 33

Credit CardsCredit Cards


Credit allows you to purchase items Credit allows you to purchase items and pay the cost over a period of and pay the cost over a period of time at a later date.time at a later date.

Credit is available in the form of:Credit is available in the form of:– Loans (for big purchases such as car, Loans (for big purchases such as car,

house)house)– Credit cards (allows you to make Credit cards (allows you to make

purchases at a variety of businesses)purchases at a variety of businesses)

Establishing Good Credit…Establishing Good Credit…

Creditors look at:Creditors look at:– Job historyJob history– EarningsEarnings– EducationEducation– Rental history Rental history – Payments of utilitiesPayments of utilities– Savings and checking accountsSavings and checking accounts

Establishing Good Credit…Establishing Good Credit…

Get a credit card to establish credit Get a credit card to establish credit historyhistory– Start small (limit $500.00)Start small (limit $500.00)– Pay in full in each monthPay in full in each month– Avoid cards with annual feesAvoid cards with annual fees– Avoid cards with high interest ratesAvoid cards with high interest rates

*Late or missed credit card payments can *Late or missed credit card payments can

double or triple your interest rate double or triple your interest rate

Bad credit Bad credit

Follows you around for 7-10 yearsFollows you around for 7-10 years

Obtain your credit history from the Obtain your credit history from the Credit BureauCredit Bureau

Credit payments should NOT exceed Credit payments should NOT exceed 20% of take home pay20% of take home pay

Credit ScoresCredit Scores

>750 excellent>750 excellent

700-749 good700-749 good

650-699 okay650-699 okay

<600 high credit risk (high interest <600 high credit risk (high interest rate)rate)

Credit cardsCredit cards

Make the largest monthly payment you Make the largest monthly payment you can afford can afford – If you paid off $1,000 credit card debt using If you paid off $1,000 credit card debt using

the minimum payment at 18% APR, it would the minimum payment at 18% APR, it would take you 6 years and cost you about $560 in take you 6 years and cost you about $560 in interestinterest

– Americans pay over Americans pay over $120 Billion dollars$120 Billion dollars a year a year in interest costsin interest costs

– Look for cards with low APR (annual Look for cards with low APR (annual percentage rate) percentage rate)


$500 balance with 24% APR ($120 fee)$500 balance with 24% APR ($120 fee)

$500 balance with 10% APR ($50 fee)$500 balance with 10% APR ($50 fee)

Minimum monthly paymentMinimum monthly paymentminimum - minimum payment required against outstanding payment required against outstanding balance, usually only slightly more balance, usually only slightly more than interest chargesthan interest charges

Positive aspects of using Positive aspects of using credit credit

You can purchase something that is You can purchase something that is nearly impossible to save all the nearly impossible to save all the money for, such as a carmoney for, such as a car

Using credit builds a good credit Using credit builds a good credit historyhistory

Credit cards are useful in case of Credit cards are useful in case of emergencies (if furnace goes out in emergencies (if furnace goes out in the middle of winter)the middle of winter)

Negative aspects of using Negative aspects of using creditcredit

You end up paying more for an item than You end up paying more for an item than it really costs if you don’t pay it all off at it really costs if you don’t pay it all off at onceonce

Example: Buy a $Example: Buy a $800800 stereo with a store stereo with a store credit plan of no interest for 6 credit plan of no interest for 6

months. months.


– Must pay $800 back before 6 monthsMust pay $800 back before 6 months

– If you don't, If you don't, the interest has been accumulating over that 6 the interest has been accumulating over that 6

months, and even if you paid $750, you are going to months, and even if you paid $750, you are going to have to pay the interest accumulated over the 6 have to pay the interest accumulated over the 6 months.months.

– may look like a good deal, BUT most people may look like a good deal, BUT most people don't pay off the balance within the specified don't pay off the balance within the specified timetime


Getting a credit card is easy…Getting a credit card is easy…– It lures people into getting things they It lures people into getting things they

do not need and spending money over do not need and spending money over their budgettheir budget

-Even though the monthly payment may -Even though the monthly payment may be low, the total amount that needs to be low, the total amount that needs to be paid back far exceeds the actual cost be paid back far exceeds the actual cost of the item. of the item.

Credit card debt increasing Credit card debt increasing each yeareach year


Using credit cards does not allow a Using credit cards does not allow a person to develop financial disciplineperson to develop financial discipline

Credit BureausCredit Bureaus

Obtain a credit report about your Obtain a credit report about your own credit historyown credit history– Equifax Credit Information ServicesEquifax Credit Information Services– TRW Consumer Assistance CenterTRW Consumer Assistance Center

20002000 Credit card debt increases with ageCredit card debt increases with age

College student debt 2000College student debt 2000 Nearly 23% of college students owe Nearly 23% of college students owe

$7,500 or more in credit card debt$7,500 or more in credit card debt

Test your credit card knowledge…Test your credit card knowledge…

Test your credit card Test your credit card knowledgeknowledge

When you're approved for a credit When you're approved for a credit card, the advertised interest rate will card, the advertised interest rate will always remain at that level. always remain at that level.


The only costs you'll pay for a credit The only costs you'll pay for a credit card are the interest fees on unpaid card are the interest fees on unpaid balances.balances.


Your payments on cash advances will Your payments on cash advances will be the same as for items you charge be the same as for items you charge at a store or other business.at a store or other business.


Credit card companies make all their Credit card companies make all their profit on the interest paid by profit on the interest paid by cardholders. cardholders.


A good way to handle your credit A good way to handle your credit card debt is to pay the minimum card debt is to pay the minimum payment each month. payment each month.


The majority of college students use The majority of college students use credit cards for emergencies only. credit cards for emergencies only.


The average consumer has three The average consumer has three credit cards. credit cards.


Your state protects you by setting Your state protects you by setting the highest credit card interest rate the highest credit card interest rate you'll pay. you'll pay.


You'll never be able to charge more You'll never be able to charge more than your credit card limit. than your credit card limit.


If you've charged to the limit on one If you've charged to the limit on one card, it makes sense to apply for card, it makes sense to apply for another. another.

banking and credit cards. fees atm fee- charge for using atm services from a different bank atm fee-...

Documents

carusing credit

credit card payments

rate bad credit

credit cardscredit cardscredit

credit card debt

credit bureaucredit

store credit plan

car payment