credit counseling credit cards good vs. evil are ‘college kids’ ready for credit cards?college...
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CREDITCOUNSELING
www.creditcards.com
CREDIT CARDSGOOD VS. EVIL
ARE ‘COLLEGE KIDS’ READY FOR CREDIT CARDS?
CREDITCOUNSELING www.creditcards.com
CREDIT CARD TYPES
RESEARCH Reward Cards
› Are for people who like to earn rewards for travel, dining, cash back etc.
Bank Cards › Are sponsored by individual banks.
› MasterCard, Visa, Discover, Optima, GM and Ford cards which are
› Bank defines spending limit › Based on your FICO score
› Banks offer a choice of payment methods› pay the balance in full with no interest
› pay a minimum part or some part of the balance with a finance charge.
Company or Retail store cards › Costco, Carson's, Wal-Mart or Target.
› Only accepted by the specific company and do not have an annual fee
› Terms/conditions of these cards vary widely
CREDITCOUNSELING www.creditcards.com
CREDIT CARDS 101
TERMS TO KNOW…….
When selecting a credit card, the following credit terms and conditions are important because they affect the total cost of credit:
Annual Fee › A flat, yearly charge similar to a membership fee,
usually $25 to $50. Annual Percentage Rate
› The APR is the measure of the cost of credit expressed as a yearly rate.
Finance Charge › The dollar amount you pay to use credit, includes
interest costs and all charges associated with the transaction.
CREDITCOUNSELING help is herewww.creditcards.com
CREDIT CARD TERMS 101 CONTINUED
Grace Period or Free Period › The grace period is the number of days you have
before a credit card company starts charging interest on new purchases. Not all credit cards have a grace period.
Periodic Rate › The interest rate the card issuer applies to your
outstanding account balance to figure the finance charge for each billing cycle.
Transaction Fees › Some credit card issuers charge additional fees: for a
cash advance, a late payment or going over your credit limit. Sometimes there is a monthly fee if you did not use the card.
CREDITCOUNSELING www.creditcards.com
SHOP AROUND….
YOU ARE AN AMERICAN FAMILY DETERMINED TO PAY OFF YOUR $8000 CREDIT CARD DEBT.
Interest Rate
MinimumPayment
Fixed payment
Number of Months to pay off
Total interest paid on debt
of $8000
12% $200 0
$250
$500
19% $200 0
$250
$500
28% $200 0 Minimum payment is not enough to reduce your debt
$250
$500
How long will it take?
How much
interest will you
pay?
CREDITCOUNSELING www.creditcards.com
WHAT IS YOUR
LIABILITYTRUTH IN LENDING ACT
Under the Truth in Lending Act› If your credit card is lost or stolen – and then is
used by someone without your permission How much do you have to pay for their charges?
$50.00
› You do not need to buy “credit card insurance” to cover amounts over $50
CREDITCOUNSELING help is herewww.creditcards.com
FEDERAL CREDIT BILLING ACT
Purpose of Act
To make quick corrections of mistakes such as…› A charge for something you did not buy› A bill for an amt different from the actual amt you
charged› A charge for something that you did not accept when
it was delivered or that was not delivered according to an agreement
› Math errors or payments not credited to your account
› A charge by someone who does not have permission to use your credit card
CREDITCOUNSELING www.creditcards.com
FEDERAL CREDIT BILLING
ACT WHAT TO DO
• Contact the credit card company within 60 days after the statement date
• Pay all other parts of the bill. You do not have to pay the disputed amount or finance charges associated with it.
• If there is an error, you do not have to pay anything
• If there is not an error, company must send you an explanation and statement of the amount your owe. The amount you owe will include finance charges
CREDITCOUNSELING help is herewww.creditcards.com
CREDIT REPORTS 1. Equifax
2. Trans union
3. Experian
What’s a credit score?
Who’s FICO?
CREDITCOUNSELING www.creditcards.com
CREDIT CARDS
Are ‘College Kids’ ready for credit cards?
CREDITCOUNSELING
www.creditcards.com
CREDIT CARDSUSE THEM WISELY!!
KNOW THE DEBT WARNING SIGNS