Presentation on theme: "Personal Finance Spring 2012. Allows the user to buy goods based on the promise that they will later pay for the goods Issuers give users access to."— Presentation transcript:
Allows the user to buy goods based on the promise that they will later pay for the goods Issuers give users access to a line of credit to purchase items
Issuer (Visa) has agreement with a business (Target) to pay charges of issuer’s users(You). You sign contract with Visa and are given a line of credit to make purchases You makes a purchase at a Target and Visa pays Target You pay back Visa at a later date, with possible interest charges
Ease of Use Emergencies Build Credit History Rewards Fraud Protection Record of transactions
Ease of Use, Psychological: You spend more! Interest Charges & Other Fees Inflated Prices for all consumers
Annual Fee: Yearly cost of owning a credit card. Many credit card companies offer cards with no annual fee. Annual Percentage Rate (APR): The amount of interest charged on a yearly basis. Example: a APR of 18% means that for $100 charged, after 1 year you would need pay $118 Balance Transfer: The process of paying off another creditor’s account Cash Advances: Money borrowed against a charge or credit card Credit Line: Also known as credit limit, this is the maximum amount that you can charge on your credit card.
Grace Period: The period within which any credit extended for purchases may be repaid without incurring a finance charge Introductory Rate: Competitive interest rate offered to cardholders, usually for three to six months, before moving to the standard APR. Finance Charge: The costs associated with your credit card account including such charges as interest, service or membership fees, transaction fees, etc. Minimum Payment Due: The minimum amount you must pay, to keep your account current, if you are not paying your balance off in full (usually 2 to 3 percent of your average daily balance).
DEBIT CARDS -linked to your bank account -less risk of over spending CREDIT CARDS -can spend more than you have (credit limit) -fraud protection -rewards -credit rating