1Credit Cards (pitfalls & proper use) Proverbs 22:7“The rich ruleth over the poor, and the borrower is servant to the lender”
2Pay Off Your Charge Cards No Where Can WE Earn 18 to 23 %Minimum Payments Can Take Up to 30 YearsTake Money From All Sources to PayCut-Em Up!!!
3Proper Use of Credit Cards Pay them off every month!!!!!!!!!Do not carry a balance – ever.Interest / fees / finance charges are a waste of moneyPositivesEstablish a positive credit historyAccess to more money than you can carry safelySome tickets, hotel rooms, rental cars require themExtra warranties, protection from theft or damageInsurance for rental cars at no extra chargePoints / discounts / rebates with some cardsStop payments are possible with credit cards
4Pitfalls of Credit Card Use (Be aware of these if you use them) You may be tempted to spend more with credit cardsYou pay finance charges or interest if you don’t pay offDebt can be compounded by finance charges, raised interest rates, and other fees if a payment is missedProblems can show up on you credit reporteffects your credit history & you will pay higher interest ratesCash advances carry fees and immediate interest chargesRates are higher & there is no grace period for cash advances.Cards with incentives (airline miles, etc.) often place restrictions that make them hard to redeemMany charge an annual fee (whether or not you use them)
5QUIZ Time!!Try to answer the following questions, and keep track of how many you get correct.
6Credit Card Quiz Question #1 How many credit cards does the average American family have?6811The average American family has 8 credit cards.
7Credit Card Quiz Question #2 Nearly 144 million Americans have general purpose credit cards. Approximately how many of them pay off their bill in full each month?55 million90 million115 million55 million Americans pay off their credit card bills in full each month.
8Credit Card Quiz Question #3 Approximately how many Americans pay only the minimum payment required each month?15 million35 million50 million35 million Americans pay only the minimum payment required each month.
9Credit Card Quiz Question #4 The credit card industry jargon for someone who pays his or her bill in full every month is:a deadbeata revolvera gamerThose who pay their bills in full every month are referred to as “deadbeats”.
10Credit Card Quiz Question #5 The credit card debt that the average American family carries is approximately:$2,500$8,000$13,000The average American family has credit card debt of roughly $8,000.
11Credit Card Quiz Question #6 How much notice must a credit card company give its customers when changing the terms of the cardholder contract?60 days30 days15 daysThey may change the terms of the contract with only 15 days notice.
12Credit Card Quiz Question #7 Which of the following is likely to trigger the universal default clause in a cardholder’s contract (meaning that the card issuer can raise the APR automatically)?You went over your credit limit on another card.You failed to make a payment to another creditor.You applied for and received a loan.ALL OF THE ABOVE !!!!!
13Credit Card Quiz Question #8 Who regulates the national banks which issue most of the credit cards in the U.S.?The Office of the Comptroller of the CurrencyThe Better Business BureauThe attorney general in each state.The OCC – part of the U.S. Treasury Department
14Credit Card Quiz Question #9 If a person’s credit card is stolen – or the number is stolen – and it is used to charge purchases, the cardholder is obligated to:Pay the credit card issuer $50 maximumPay 5% of the purchases charged by the thiefPay the entire amount charged by the thief if the cardholder doesn’t notify the credit card company within 3 days of the theft.You are only obligated to pay up to $50 for charges made to your card by a thief.
15Credit Card Quiz Question #10 What does a high FICO score indicate?The individual is likely to pay their bills.The individual is more likely to carry debt.The individual is likely to cancel his credit card and seek a better deal.Your FICO score is your credit rating. A high rating means you are likely to pay your bills.
16Credit Card Quiz Question #11 Why are there no legal limits on the amount of interest and fees that banks can charge for a credit card?Some states allow higher interest and fees than others.Two U.S. Supreme Court decisions permit banks to charge what the market will bear.State usury laws permit them to do so.Two U.S. Supreme Court decisions have allowed for it.
17Grade Your Own Quiz9 to 11 right – You probably have your FICO score memorized. You’re a pro!6 to 9 right – You clearly know your way around a credit card statement.3 to 6 right – You need a crash course in personal finance. Good news…we have a Sunday School Class just for you.0 to 3 right – You should dispose of your credit card(s) and use cash for the foreseeable future.
18Know Your Credit History You are entitled to a free copy of your credit report once per year!Choose any of the 3 credit agencies (TransUnion, Experian, Equifax)Telephone:Hearing Impaired TDD:Get errors corrected!