Credit Cards Credit is the amount of financial trust extended to a person/business by a lender – A loan – Allows you to buy now – pay later – Major Credit cards (accepted most places): Visa, Master Card, American Express, and Discover – Store Credit cards: (for use in that store) Target, Kohls, Macys, Walmart, Lord & Taylor
Credit Advantages Purchase now instead of later Buy major items without having to save for the entire purchase Enjoy goods/services without needing money Accepted almost everywhere No need to carry cash Shop on line and phone Available in case of emergencies Accurate record keeping Disadvantages Fees: interest, finance charges, annual fees Spending future earnings, may not be able to buy in the future Encourages impulse buying – If unable to pay bill = repossession of items (car, houses) Poor credit rating if not paid on time
Credit Card Info. If stolen, owner only responsible for first $50 – Protect your card and account no. – Easy to steal or assume someones identity to open cards Must be 18 years of age and have an income – No income, must have co-signers Provides excellent record keeping opportunities Check credit report – shows all accounts, loans, credit cards – Equifax – Trans Union – Experian Whats your FICO score? – Median 720 – Highest 850
Bankruptcy CHAPTER 7 – Forces the liquidation of all assets to pay creditors CHAPTER 11 – Allows companies/corporations to reorganize their debt or rehabilitate and re-organize their financial structure. Propose a plan that acceptable to all parties. CHAPTER 13 – Enforces a repayment program without forfeiting property and requires the debtor maintain a source of income and adhere to payment schedule.