2.4.1.G1 © Family Economics & Financial Education – December 2005 – Get Ready to Take Charge of Your Finances – Take Charge of Credit Cards Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences at the University of Arizona Credit Cards

2.4.1.G1 © Family Economics & Financial Education – December 2005 – Get Ready to Take Charge of Your Finances – Take Charge of Credit Cards Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences at the University of Arizona What is a Credit Card? Pre-approved credit  Credit- When a financial institution lends an individual money and trusts he or she will pay it back Used to purchase items now and pay for them later The word credit comes from the Latin word “Credo” meaning “I believe.”

2.4.1.G1 © Family Economics & Financial Education – December 2005 – Get Ready to Take Charge of Your Finances – Take Charge of Credit Cards Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences at the University of Arizona Credit Card Terms Interest- Fee for borrowed money Credit Line – Maximum amount of money that can be charged to a credit card Annual Percentage Rate- Interest rate charged to the cardholder on the amount borrowed Finance Charge – Possible charges assessed to an account for credit card use

2.4.1.G1 © Family Economics & Financial Education – December 2005 – Get Ready to Take Charge of Your Finances – Take Charge of Credit Cards Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences at the University of Arizona Credit Card Terms Continued Annual Fees - Fee charged once per year for credit card ownership Minimum Payment – Minimum payment of a credit card bill that must be paid Due Date – Date payment is due Late Payment Fee - Fee charged when a cardholder does not make the minimum monthly payment by the due date

2.4.1.G1 © Family Economics & Financial Education – December 2005 – Get Ready to Take Charge of Your Finances – Take Charge of Credit Cards Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences at the University of Arizona Advantages  Convenient  Useful for emergencies  Often required to hold a reservation  Purchase expensive items earlier  Eliminate the need to carry around large amounts of cash

2.4.1.G1 © Family Economics & Financial Education – December 2005 – Get Ready to Take Charge of Your Finances – Take Charge of Credit Cards Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences at the University of Arizona Disadvantages  Paying interest  Additional fees are common  Tempting to overspend  Responsible for lost/stolen cards  Identity theft is easier  Can cause large amounts of debt

2.4.1.G1 © Family Economics & Financial Education – December 2005 – Get Ready to Take Charge of Your Finances – Take Charge of Credit Cards Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences at the University of Arizona America’s Debt A 2007 survey of college students said that one-third of students reported having two credit cards or more, while 12% had three or more credit cards. Many students believe they will make much more money after college than they will actually earn. Students take on debt because they expect to be able to repay it. College students carry an average of $1,035 of credit card debt (this does not include college loans). CREDIT CARD FACTS

2.4.1.G1 © Family Economics & Financial Education – December 2005 – Get Ready to Take Charge of Your Finances – Take Charge of Credit Cards Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences at the University of Arizona Congratulations!  Your monthly credit card bill has arrived Guided Spending Plan Question 10  Identify how much debt, if any, was received  Need to include at least the minimum payment CREDIT CARD STATEMENTS

2.4.1.G1 © Family Economics & Financial Education – December 2005 – Get Ready to Take Charge of Your Finances – Take Charge of Credit Cards Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences at the University of Arizona Debt should be less than 20% of gross income (excluding mortgage payments) If credit card debt was received, use a financial calculator to calculate how long will it take to pay off the debt at the minimum monthly payment Financial Calculator: CREDIT CARD STATEMENTS