Credit CardsIndependent Living

Why learn about credit/credit cards?!

9 out of 10 American families use credit Mortgage, Medical, credit cards, etc.

An average American family has… 2.5 credit cards $2,400 in charges Pays $441+ per year in interest charges

1/6 families feel out of control with their credit cards and keeps on charging

1/10 families only make minimum payments and keeps on charging

1/20 families CAN’T even make minimum payments on all of their cards and yet they keep charging!

The granting of credit: The 3 C’s In order to be approved for credit/borrow

money the creditor will look at the following things:

Capacity: is you’re ability to repay what you charge

Collateral: is what they will take back if you don’t pay (doesn't’t apply for credit cards)

Character: is based on your credit bureau score, past experience with credit cards

Your credit bureau score: What is it?

A score given to each person based on their credit character

Can be anywhere from 0-850

How is it calculated? Payment history Amounts owed Length of history New credit Types of credit

Your credit bureau score: Why is it important?

Your score follows you everywhere and affects everything: Ability to get a loan Ability to get a credit card Ability to rent/buy a home Ability to buy a car

Key terms:APR- annual percentage rate

variable/can change (important to know if you don’t pay off your credit cards)

Key terms:Fees: late fee, over limit fee, etc.

What things can hurt score the most?Maxed out credit cardsBankruptcyMissing a payment

What should you look for when shopping for a credit card?

Low APRDoes it offer rewards?Do they charge fees?

Additional notes: You can officially get a credit card on

your own at age 18 But if you’re under 21 you need to prove

income or have a co-signer

When to get a credit card? If you’re 18, apply with a co-signer now,

start building credit Apply for a store card (Kohl’s, Target,

etc.)