Presented by:Presented by:

THETHE

BASICS BASICS

WHAT IS THE DIFFERENCE?WHAT IS THE DIFFERENCE?

CASH?CASH?

A DEBIT CARD?A DEBIT CARD? A CREDIT CARD? A CREDIT CARD? A GIFT CARD?A GIFT CARD?

What is DEBT?What is DEBT?

A. A. You are in a deep hole.You are in a deep hole.

B.B. You have to pay money to You have to pay money to someone.someone.

C.C. You owe someone a favor.You owe someone a favor.

D. D. You are entitled to free stuff.You are entitled to free stuff.

Answer: BAnswer: B

When you are in debt, When you are in debt, you have to pay money you have to pay money

to someone.to someone.

What does CREDIT mean? What does CREDIT mean?

A. You have a good reputation.A. You have a good reputation.

B. B. You might graduate.You might graduate.

C. You can borrow to buy things.C. You can borrow to buy things.

D. You can get things at the store for D. You can get things at the store for free. free.

Answer: CAnswer: C

Credit is the ability to borrow money.Credit is the ability to borrow money.

Borrowing is the creation of debt.Borrowing is the creation of debt.

Debt is what you oweDebt is what you owe

There is no such thing as a free There is no such thing as a free lunch.lunch.

What is INTEREST? What is INTEREST?

A.A. Money you pay to rent Money you pay to rent money.money.

B.B. Someone else likes you.Someone else likes you.

C. You like someone else.C. You like someone else.

D. You qualify for a scholarship.D. You qualify for a scholarship.

Answer: AAnswer: A

Interest is the amount a lender Interest is the amount a lender charges you to borrow money charges you to borrow money

from them. from them.

The Trick about InterestThe Trick about Interest

The higher the interest rate, the The higher the interest rate, the more you will pay.more you will pay.

What is compound interest?What is compound interest?

A.A. Liking more than 1 girlfriend or Liking more than 1 girlfriend or boyfriend.boyfriend.

B.B. Interest charged on interest that is Interest charged on interest that is added on to the credit card bill. added on to the credit card bill.

C.C. Something you learn in chemistry Something you learn in chemistry class.class.

D. A grinding power. D. A grinding power.

Answer: BAnswer: B

A debt that goes unpaid and A debt that goes unpaid and is subject to compound is subject to compound

interest grows into a much interest grows into a much larger number very quickly.larger number very quickly.

The True Cost of CreditThe True Cost of Credit

The True Cost of CreditThe True Cost of Credit

A A $7,000 $7,000 Balance (at 20% interest)Balance (at 20% interest)

= $1, 400/year= $1, 400/year

= $116/month = $116/month

(…and you haven’t paid any of the (…and you haven’t paid any of the $7,000 back yet)$7,000 back yet)

MAKING MINIMUM MAKING MINIMUM PAYMENTSPAYMENTS

If you make the minimum payment of 2%:If you make the minimum payment of 2%:

Your interest charges will total: Your interest charges will total: $$30,294.8030,294.80

Number of payments you make: Number of payments you make: 601601

Total number of years to payment: Total number of years to payment: 50.0850.08

In In 50.0850.08 years you will paying your years you will paying your final payment on that final payment on that $7,000$7,000 balance balance

with your social security check!with your social security check!

If You If You SAVE SAVE That Money…That Money…If you save or invest $20 per month for 50.08 years you will If you save or invest $20 per month for 50.08 years you will

have:have:

5% = $54, 082.00 5% = $54, 082.00

6% = $76,923.976% = $76,923.97

8% =8% = $161,861.61$161,861.61

This is compound interest working for YOU!This is compound interest working for YOU!

Thank goodness for Make-oversThank goodness for Make-overs

The Credit CARD Act of 2010 requires The Credit CARD Act of 2010 requires that account statements disclose that account statements disclose additional information such as your additional information such as your payment due date and consequences payment due date and consequences of only making the minimum of only making the minimum payments.payments.

Source: Creditcards.comSource: Creditcards.com

No More Tricks!No More Tricks!

45 days advance notice to increase 45 days advance notice to increase interest rateinterest rate

Cancellation of card is not a defaultCancellation of card is not a default Interest rate cannot be increased for Interest rate cannot be increased for

past charges or because you default past charges or because you default on another cardon another card

Fees and interest rates cannot Fees and interest rates cannot increase for 1 year except when there increase for 1 year except when there was a promotional rate for 6 monthswas a promotional rate for 6 months

No more fooling you!No more fooling you!

No over limit charges unless you agreeNo over limit charges unless you agree Card agreements (the fine print) must be Card agreements (the fine print) must be

available on the internetavailable on the internet No credit cards if you are under 21 unless No credit cards if you are under 21 unless

you have an over 21 co-signer or you can you have an over 21 co-signer or you can show you can pay the cardshow you can pay the card

No more freebies to open up cards on No more freebies to open up cards on college campusescollege campuses

WATCH OUT! This does not apply WATCH OUT! This does not apply to sporting to sporting events or other venues.events or other venues.

New & Improved Statement New & Improved Statement will show:will show:

Payment information Payment information New balance $1,734.53New balance $1,734.53Minimum payment due $53.00Minimum payment due $53.00Payment due date 4/20/12 Payment due date 4/20/12

– Late payment warningLate payment warning: : If we do If we do not receive your minimum payment not receive your minimum payment by the date listed above, you may by the date listed above, you may have to pay a late fee of up to XX have to pay a late fee of up to XX and your APRs may be increased up and your APRs may be increased up to the Penalty APR of 28.99%to the Penalty APR of 28.99%

Source: Creditcards.comSource: Creditcards.com

Disclosing the Minimum Payment Disclosing the Minimum Payment Pitfall!Pitfall!

Minimum payment warning:Minimum payment warning: If you make If you make only the minimum payment each period, only the minimum payment each period, you you will pay more in interest and it will will pay more in interest and it will take you take you longer to pay off your balance. longer to pay off your balance.

For example, if you had a balance of $1,000 at an For example, if you had a balance of $1,000 at an interest rate of 17% and always paid only the interest rate of 17% and always paid only the minimum required, it would take over 7 years to minimum required, it would take over 7 years to repay this balance. repay this balance.

If you would like information about credit If you would like information about credit counseling services, call 1-800-XXX-XXXX        counseling services, call 1-800-XXX-XXXX        

What the new statement will show on What the new statement will show on APR’sAPR’s

These account changes will impact your account as follows: These account changes will impact your account as follows:

Transactions made on or after 4/9/12:Transactions made on or after 4/9/12: As of 5/10/12, As of 5/10/12, changes to APRs described below will apply to these changes to APRs described below will apply to these transactions. transactions.

Transactions made before 4/9/12:Transactions made before 4/9/12: Current APRs will Current APRs will continue to apply to these transactions. continue to apply to these transactions.

Revised terms, as of 5/10/12Revised terms, as of 5/10/12 APR for purchasesAPR for purchases 16.99%16.99%

Late payment fee:Late payment fee:$32 if your balance is less than or equal to $32 if your balance is less than or equal to

$1,000;$1,000;$39 if your balance is more than $1,000$39 if your balance is more than $1,000

Source: Creditcards.comSource: Creditcards.com

Consequences of Consequences of Good & Bad Credit Good & Bad Credit

WHAT IS CREDIT AND CREDIT WHAT IS CREDIT AND CREDIT SCORE? SCORE?

It’s a matter of life and It’s a matter of life and debt!debt!

Just like you are graded in school on how you Just like you are graded in school on how you perform academically…YOU ARE GRADED in perform academically…YOU ARE GRADED in LIFE on HOW you perform FINANCIALLYLIFE on HOW you perform FINANCIALLY

A 3-digit number between 300-850. The better A 3-digit number between 300-850. The better your credit, the higher your credit score.your credit, the higher your credit score.

Factors used to determine your Factors used to determine your credit scorecredit score

how you pay back your debtshow you pay back your debts– paid on time?paid on time?– paid at all?paid at all?– paid debt with credit cards?paid debt with credit cards?– paid in part or in full?paid in part or in full?

how you manage your debtshow you manage your debts– do you have high balances?do you have high balances?– do you have too many open credit cards? do you have too many open credit cards?

WHO GRADES YOUR CREDIT WHO GRADES YOUR CREDIT REPORT?REPORT?

Credit Bureaus!Credit Bureaus!

Visit Visit

AnnualCreditReport.com AnnualCreditReport.com for a free copy of your for a free copy of your credit report and myfico.com for your credit credit report and myfico.com for your credit

scorescore..

TransUnion

Equifax Experian

Credit-reportingagenci

es

What is so important about What is so important about Good Credit? Good Credit?

Obtain loans for cars, home, educationObtain loans for cars, home, education

Better interest rates Better interest rates

Lower installment paymentsLower installment payments

May help you rent and obtain May help you rent and obtain employment employment

What are consequences of What are consequences of Bad Credit?Bad Credit?

Being turned down for a loanBeing turned down for a loan Being turned down from a jobBeing turned down from a job Creditors calling your home or workCreditors calling your home or work Being sued and having judgments Being sued and having judgments

against you including wages garnishedagainst you including wages garnished BankruptcyBankruptcy Relationship problems, depression, Relationship problems, depression,

suicidesuicide

Did you know? Did you know?

If you apply for an If you apply for an auto loan, the auto loan, the

lender will lender will probably review probably review

your credit your credit report.report.

And did you know?And did you know?

FALSEFALSE

And did you also know?And did you also know?

- Missing just 1 or 2 credit card Missing just 1 or 2 credit card payments will hurt your credit rating.payments will hurt your credit rating.

- Negative information can legally Negative information can legally remain on your credit report for up to remain on your credit report for up to 77 years. years.

What is bankruptcy? What is bankruptcy?

- What you own may get sold to pay - What you own may get sold to pay off your debtsoff your debts

- Some of your income may be used - Some of your income may be used to pay your old debtto pay your old debt

- If you’re an honest debtor, the Court - If you’re an honest debtor, the Court may discharge your debt and you will may discharge your debt and you will have a fresh starthave a fresh start

Tips for Good CreditTips for Good Credit

• Pay bills in full and on timePay bills in full and on time

• Don’t open too many cards but if Don’t open too many cards but if already opened, do not close these already opened, do not close these established accounts established accounts

• Do not have a balance on your credit Do not have a balance on your credit card exceeding more than 20-30% of card exceeding more than 20-30% of your credit limit (DON’T MAX OUT!)your credit limit (DON’T MAX OUT!)

TIPS: Get Credit with TIPS: Get Credit with knowledgeknowledge

Beware of Credit Card Beware of Credit Card Representatives at Representatives at Games, Concerts, Games, Concerts, Events.Events.

Resist opening a new Resist opening a new credit card account for credit card account for the enticing “free gifts”the enticing “free gifts”

Tips: Obtaining a CardTips: Obtaining a Card ““Shop” for a credit Shop” for a credit

card with the best card with the best terms that suit youterms that suit you

ANNUAL MEMBERSHIP FEE:ANNUAL MEMBERSHIP FEE: Refer to your Refer to your statement in the month in which the fee is billed.statement in the month in which the fee is billed.

RENEWING YOUR ACCOUNT:RENEWING YOUR ACCOUNT: You may have your You may have your annual membership fee credited to your account if annual membership fee credited to your account if you close your account within 30 days from the you close your account within 30 days from the mailing or delivery date of the statement containing mailing or delivery date of the statement containing the fee, even if you use your card during that period. the fee, even if you use your card during that period. You may call the Customer Service number or write You may call the Customer Service number or write to the Customer Service address on your statement to the Customer Service address on your statement during this 30 day period and your account will be during this 30 day period and your account will be terminated; we will credit your account for the terminated; we will credit your account for the amount of the annual fee.amount of the annual fee.

ANNUAL PERCENTAGE RATE:ANNUAL PERCENTAGE RATE: Refer to the Rate Refer to the Rate Summary section of this statement. Your periodic Summary section of this statement. Your periodic rates and APRs may vary.rates and APRs may vary.

RATE AND ACCOUNT SUMMARIES:RATE AND ACCOUNT SUMMARIES: The purchase The purchase and advance features of this account may be listed in and advance features of this account may be listed in the Rate Summary Section of this statement under the Rate Summary Section of this statement under the following titles: Standard Purch, Purch/Adv, the following titles: Standard Purch, Purch/Adv, Standard Adv, and various numbered Offers. The Standard Adv, and various numbered Offers. The Account Summary section of this statement includes Account Summary section of this statement includes on the PURCHASES line subtotals for all purchase on the PURCHASES line subtotals for all purchase features, and on the ADVANCES line subtotals for all features, and on the ADVANCES line subtotals for all advance features, of the Previous Balance, new advance features, of the Previous Balance, new Purchases & Advances, Payments & Credits, FINANCE Purchases & Advances, Payments & Credits, FINANCE CHARGE and New Balance amounts.CHARGE and New Balance amounts.

PERIODIC RATES: PERIODIC RATES: (D) and (F) indicate a daily (D) and (F) indicate a daily periodic rate. (M) indicates a monthly periodic rate.periodic rate. (M) indicates a monthly periodic rate.

– Read and understand the Read and understand the terms in the disclosure terms in the disclosure (review online)(review online)

– Pay close attention to Pay close attention to various late fees and various late fees and penaltiespenalties

Tip: Shop for a Credit CardTip: Shop for a Credit Card

COMPARE CREDIT COMPARE CREDIT CARD OFFERS:CARD OFFERS:

BANKRATE.COMBANKRATE.COM– click on the tab click on the tab ““credit cards”credit cards”

TIPS: Make a BudgetTIPS: Make a Budget

INCOMEINCOME

Gross wages Gross wages $1,600$1,600

Less payroll deductions Less payroll deductions $400$400

Net Monthly Pay Net Monthly Pay $1,200$1,200

Expenses & SavingsExpenses & Savings

RentRent $500$500UtilitiesUtilities $30$30FoodFood $200$200ClothingClothing $100$100LaundryLaundry $20$20RecreationRecreation $50$50TransportationTransportation $100$100Savings (LESS)Savings (LESS) $200$200Total Expenses:Total Expenses:

$1,200$1,200

Tip: Use your card wisely!Tip: Use your card wisely!

Limit credit card use for essential Limit credit card use for essential purchases only. You may purchases only. You may want want that that shirt, but do you really shirt, but do you really need need it?it?

How to write a check: Step How to write a check: Step 11

Step 2Step 2

Step 3Step 3

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