what do you know about credit? credit. “but roger, everyone spends more that he earns. that’s...
TRANSCRIPT
![Page 1: What do you know about credit? Credit. “But Roger, everyone spends more that he earns. That’s what Canada is for.”](https://reader035.vdocuments.net/reader035/viewer/2022070403/56649f2c5503460f94c47999/html5/thumbnails/1.jpg)
What do you know about credit?
Credit
![Page 2: What do you know about credit? Credit. “But Roger, everyone spends more that he earns. That’s what Canada is for.”](https://reader035.vdocuments.net/reader035/viewer/2022070403/56649f2c5503460f94c47999/html5/thumbnails/2.jpg)
“But Roger, everyone spends more that he earns. That’s what Canada is for.”
![Page 3: What do you know about credit? Credit. “But Roger, everyone spends more that he earns. That’s what Canada is for.”](https://reader035.vdocuments.net/reader035/viewer/2022070403/56649f2c5503460f94c47999/html5/thumbnails/3.jpg)
Credit Cards
■ Would you get a credit card?■ How would you use a credit
card/what would you use it for?
![Page 4: What do you know about credit? Credit. “But Roger, everyone spends more that he earns. That’s what Canada is for.”](https://reader035.vdocuments.net/reader035/viewer/2022070403/56649f2c5503460f94c47999/html5/thumbnails/4.jpg)
Credit
Buy now...
pay later!■ Impulse buying■ Instant gratification
![Page 5: What do you know about credit? Credit. “But Roger, everyone spends more that he earns. That’s what Canada is for.”](https://reader035.vdocuments.net/reader035/viewer/2022070403/56649f2c5503460f94c47999/html5/thumbnails/5.jpg)
What is Credit
■ The privilege of using someone else’s money to purchase an item or service now and then paying for it later
■ Creditor: the person or business that sells on credit or grants a loan
■ Debtor: the person or business that buys on credit or obtains a loan.
![Page 6: What do you know about credit? Credit. “But Roger, everyone spends more that he earns. That’s what Canada is for.”](https://reader035.vdocuments.net/reader035/viewer/2022070403/56649f2c5503460f94c47999/html5/thumbnails/6.jpg)
Credit
■ Advantages• saving money• credit rating• monthly
statement• instant
enjoyment• convenience• emergency
needs
■ Disadvantages• credit costs
• impulse buying• overbuying• financial
difficulties
![Page 7: What do you know about credit? Credit. “But Roger, everyone spends more that he earns. That’s what Canada is for.”](https://reader035.vdocuments.net/reader035/viewer/2022070403/56649f2c5503460f94c47999/html5/thumbnails/7.jpg)
Types of Credit
■ Credit cards■ Instalments; store credit (The Brick
“Don’t pay for a Year” Event)■ Loans
○ term (fixed set of time) – car loan/lease○ demand – requires collateral○ mortgage○ line of credit○ school loan
![Page 8: What do you know about credit? Credit. “But Roger, everyone spends more that he earns. That’s what Canada is for.”](https://reader035.vdocuments.net/reader035/viewer/2022070403/56649f2c5503460f94c47999/html5/thumbnails/8.jpg)
Student Loans-OSAP
Ontario Student Assistance Program (OSAP)
■ Government funding for college/university
■ Comes in form of a grant (don’t have to pay back) or a loan (do have to pay back)
![Page 9: What do you know about credit? Credit. “But Roger, everyone spends more that he earns. That’s what Canada is for.”](https://reader035.vdocuments.net/reader035/viewer/2022070403/56649f2c5503460f94c47999/html5/thumbnails/9.jpg)
OSAP
■ Eligibility:○ Canadian citizen○ Considers: marital status, school
attending, program, your family’s potential to contribute
■ Ave 4 year degree debt = ~$21,000■ Ave 2 year diploma debt = ~$12,000
![Page 10: What do you know about credit? Credit. “But Roger, everyone spends more that he earns. That’s what Canada is for.”](https://reader035.vdocuments.net/reader035/viewer/2022070403/56649f2c5503460f94c47999/html5/thumbnails/10.jpg)
OSAP
■ Post-graduation, you get 6 months where you don’t need to pay the loan back and are not charged interest
Average time to pay off your OSAP debt:
9.5 years
![Page 11: What do you know about credit? Credit. “But Roger, everyone spends more that he earns. That’s what Canada is for.”](https://reader035.vdocuments.net/reader035/viewer/2022070403/56649f2c5503460f94c47999/html5/thumbnails/11.jpg)
30% off Tuition
■ Ontario govnt currently running a promotion for 30% off your tuition!!!
■ Eligibility:○ Canadian citizen/resident○ Full-time student○ Left high school <4yrs○ Undergraduate degree○ Parents make less than $160K
![Page 12: What do you know about credit? Credit. “But Roger, everyone spends more that he earns. That’s what Canada is for.”](https://reader035.vdocuments.net/reader035/viewer/2022070403/56649f2c5503460f94c47999/html5/thumbnails/12.jpg)
Why Be a Lender?1. Why do banks and stores offer
credit?○ to increase sales○ to attract customers
2. How do lenders make money by offering credit?
○ potentially collect interest charges (make money)
![Page 13: What do you know about credit? Credit. “But Roger, everyone spends more that he earns. That’s what Canada is for.”](https://reader035.vdocuments.net/reader035/viewer/2022070403/56649f2c5503460f94c47999/html5/thumbnails/13.jpg)
Applying for Credit
■ Why would you apply for credit card?○ access funds in an emergency○ security when traveling○ to create a credit history○ establish a credit rating
![Page 14: What do you know about credit? Credit. “But Roger, everyone spends more that he earns. That’s what Canada is for.”](https://reader035.vdocuments.net/reader035/viewer/2022070403/56649f2c5503460f94c47999/html5/thumbnails/14.jpg)
Credit Rating
What does this mean?■ Information is collected on both individuals
and businesses for a period of seven years
■ Keep track of defaults (debt that has gone unpaid for so long that the creditors wonder if they money will ever be paid back)
![Page 15: What do you know about credit? Credit. “But Roger, everyone spends more that he earns. That’s what Canada is for.”](https://reader035.vdocuments.net/reader035/viewer/2022070403/56649f2c5503460f94c47999/html5/thumbnails/15.jpg)
■ Indicates the level of risk that a consumer, business, or government will pose if credit is granted by a business
■ Bad credit rating can get you denied for a car loan or a landlord may refuse to rent to you
Why is it important?
![Page 16: What do you know about credit? Credit. “But Roger, everyone spends more that he earns. That’s what Canada is for.”](https://reader035.vdocuments.net/reader035/viewer/2022070403/56649f2c5503460f94c47999/html5/thumbnails/16.jpg)
How Do I Establish a Credit Rating?
■ Students:1. Getting and keeping a job
2. Buying something on credit (with credit card)
and paying it off before interest is charged
(magazine)
3. Having someone, such as a family member
or close friend with a good credit rating, co-
sign a loan
![Page 17: What do you know about credit? Credit. “But Roger, everyone spends more that he earns. That’s what Canada is for.”](https://reader035.vdocuments.net/reader035/viewer/2022070403/56649f2c5503460f94c47999/html5/thumbnails/17.jpg)
Applying for Credit
■ 3 C’s of Credit○ Character○ Capacity○ Capital
![Page 18: What do you know about credit? Credit. “But Roger, everyone spends more that he earns. That’s what Canada is for.”](https://reader035.vdocuments.net/reader035/viewer/2022070403/56649f2c5503460f94c47999/html5/thumbnails/18.jpg)
Character
■ Individual financial personality○ Regular employment (how long)○ Willing to accept responsibility for
debt (pay bills on time)○ Has a bank account○ Reliable in job ○ Present address (how long)○ Good credit report
![Page 19: What do you know about credit? Credit. “But Roger, everyone spends more that he earns. That’s what Canada is for.”](https://reader035.vdocuments.net/reader035/viewer/2022070403/56649f2c5503460f94c47999/html5/thumbnails/19.jpg)
Capacity
■ Ability to repay debt on time○ Income level –steady job○ Children○ Other debts, monthly payments
■ Car loan■ Mortgage/rent■ Other credit cards■ Other household bills (Hydro, phone)
![Page 20: What do you know about credit? Credit. “But Roger, everyone spends more that he earns. That’s what Canada is for.”](https://reader035.vdocuments.net/reader035/viewer/2022070403/56649f2c5503460f94c47999/html5/thumbnails/20.jpg)
Capital/Collateral
■ Financial value or worth of the person –assets used to repay debt○ The total value of possessions e.g.,
houses, cars. savings, investments, etc. that could be sold
![Page 21: What do you know about credit? Credit. “But Roger, everyone spends more that he earns. That’s what Canada is for.”](https://reader035.vdocuments.net/reader035/viewer/2022070403/56649f2c5503460f94c47999/html5/thumbnails/21.jpg)
Credit Cards
Video: Credit Card Animation
1. With a credit card I don’t have to delay getting what I want.
2. I don’t have to ask myself the question “Do I really need or want this” or
“Do I have enough money to buy this?”
3. I can buy whatever I want when I want!
![Page 22: What do you know about credit? Credit. “But Roger, everyone spends more that he earns. That’s what Canada is for.”](https://reader035.vdocuments.net/reader035/viewer/2022070403/56649f2c5503460f94c47999/html5/thumbnails/22.jpg)
Credit Cards
■ How does interest work?■ When does it come into play?■ What is the actual cost of an
item purchased using a credit card?
Video: Credit Cards Debt Explained
![Page 23: What do you know about credit? Credit. “But Roger, everyone spends more that he earns. That’s what Canada is for.”](https://reader035.vdocuments.net/reader035/viewer/2022070403/56649f2c5503460f94c47999/html5/thumbnails/23.jpg)
Credit Card Debt
Scenario:● $2000 outstanding on credit card● 2.5% minimum payment required (or
$10.00, whichever is greater)● Option 1 – pay the minimum each month ● Option 2 – pay the minimum + $50.00● Option 3 – pay a fixed amount of $200.00
![Page 24: What do you know about credit? Credit. “But Roger, everyone spends more that he earns. That’s what Canada is for.”](https://reader035.vdocuments.net/reader035/viewer/2022070403/56649f2c5503460f94c47999/html5/thumbnails/24.jpg)
![Page 25: What do you know about credit? Credit. “But Roger, everyone spends more that he earns. That’s what Canada is for.”](https://reader035.vdocuments.net/reader035/viewer/2022070403/56649f2c5503460f94c47999/html5/thumbnails/25.jpg)
Rule of 20-10
Tells you how much credit (debt) you can afford
● Do not borrow more than 20% of your annual net income (not including your mortgage)
● Payments on these loans should not equal
more than 10% of your monthly net income