Credit and debt management. Student Learning Objective Compare and contrast the financial benefits of different products and services offered by a variety.

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Presentation transcript:

Credit and debt management

Student Learning Objective Compare and contrast the financial benefits of different products and services offered by a variety of financial institutions

Types of Financial Institutions  Banks  Credit Unions  Savings and Loans  Consumer Finance Companies

Benefits of Financial Institutions. Safety It’s risky to keep your money in cash. It could be lost, stolen, or destroyed. Financial institutions keep your funds safe.

Convenience With banks, there’s no need to carry cash. If you need cash, you can easily access your funds virtually anywhere.

Money saver No need to use check cashing stores that charge enormous fees. Using a bank will help you save.

Security No need to worry—all U.S. banks have to follow federal and state laws and regulations. At most banks, funds are insured by the FDIC. FDIC insures each person’s money to at least $250,000

Financial Future You’ll have access to financial professionals to help you. Knowledgeable advice of bankers is a valuable resource to help you build a better financial future.

Products and Services of Banks  Checking Accounts  Savings Accounts  Certificates of Deposits  IRA’s  Credit Cards  Mortgages  Home Equity Lines of Credit & Loans  Custom Credit Line  Personal Loan

 Annuities  Advisory Accounts  Bonds  Insurance  IRA’s and Rollovers  Mutual Funds  Securities Backed Lending

 Online Banking  Mobile and Tablet Banking  Text Banking  Global Client Banking  Account Alerts  Auto Save  Inter-Institutions Transfers  Online Bill Pay  Pay other People

 Protect your money  Overdraft protection  Online Fraud Protection

Credit Unions

Links  federalreserve federalreserve

Credit Advantages  Improved standard of living

Credit Advantages  Improved standard of living  Convenience and safety

Credit Advantages Improved standard of living Convenience and safety Help in emergencies

Credit Advantages  Improved standard of living  Convenience and safety  Help in emergencies  Help in record keeping

Credit Advantages  Improved standard of living  Convenience and safety  Help in emergencies  Help in record keeping  Forced savings (for some)

Credit Disadvantages  Interest charges and fees  Grace period  Universal default  Late payments  Over limit  Too much debt / available credit  Too many credit inquiries / new car loan

Credit Disadvantages  Interest charges and fees  Increased impulse buying

Credit Disadvantages  Interest charges and fees  Increased impulse buying  Financial problems  Bankruptcy

Which of the following is not an advantage of credit?  Improved standard of living  Help in emergencies if purchase is necessary  Interest charges and fees associated with credit  Help with record keeping  Convenience

Which of the following is not an advantage of credit?  Improved standard of living  Help in emergencies if purchase is necessary  Interest charges and fees associated with credit  Help with record keeping  Convenience

What do you think? Discussion © EMC Publishing, LLC Many people say that credit is the American way. How has credit helped Americans live better lives? Do you know anyone who doesn’t use credit at all? How does he or she get by? Do you think credit is good or bad?

Credit Fraud and Identity Theft  Credit fraud

Credit Fraud and Identity Theft Credit card fraud Identity theft John A. Doe Timothy B. Jones

Credit Identity Theft Tips  Don’t give out your Social Security number unless absolutely necessary (give last four digits only).

Credit Identity Theft Tips  Don’t give out personal information to strangers on phone or over Internet.

Credit Identity Theft Tips  Remove mail from mailbox as quickly as possible (hold mail if going to be gone).

Credit Identity Theft Tips  Carefully examine all bills that come in mail / .

Credit Identity Theft Tips  Use shredder to destroy personal information.

Credit Identity Theft Tips  Don’t allow others to look over your shoulder or watch you use credit / debit /ATM cards (skimming).

Credit Identity Theft Tips  Always keep wallet safely in pocket (buttoned) or purse (securely closed).

Credit Identity Theft Tips  Keep all receipts and check against credit card / bank statement for transactions you didn’t make.

Credit Identity Theft Tips  Use secure Web sites if you must send credit or personal information over Internet.

Credit Reporting Identity Theft  Notify authorities.  Notify creditors.  Don’t pay bills you suspect are fraudulent.

Which of the following is not a suggestion to help with identity theft?  Cut up outdated credit cards.  Shred documents that contain personal information.  Don’t give out Social Security number unless absolutely necessary.  Destroy all receipts as soon as possible.  Securely store wallet.

Which of the following is not a suggestion to help with identity theft?  Cut up outdated credit cards.  Shred documents that contain personal information.  Don’t give out Social Security number unless absolutely necessary.  Destroy all receipts as soon as possible.  Securely store wallet.

What do you think? Discussion © EMC Publishing, LLC Do you know anyone who has had his or her identity stolen? How did he or she deal with it? What tips do you think are most important to protecting your identity? What tips would you add to the list?

Types of Credit Short-Term Credit  Service credit  Installment credit  Credit cards

Types of Credit Short-Term Credit  Credit vs. charge card  Minimum payment vs. full payment  Annual percentage rate (APR)

Other Cards Not Credit Cards  Debit cards  Prepaid cards  Gift cards

Credit Cards Safeguarding Cards  Cut up expired cards.  Sign backs of cards.  Carry only one or two cards.  Photocopy both sides for records.  Retrieve cards after transactions.  Don’t let others borrow cards.

Loans Types of Loans  Personal loans  Secured (collateral)  Unsecured loans

Loans Types of Loans  Auto loans

Loans Types of Loans  Student loans

Loans Types of Loans  Home loans (mortgage)  Fixed vs. variable rate  Home equity loans  Usually variable rate tied to prime

Loans Types of Loans  Consolidation loans

Loans Sources of Loans  Banks  Credit unions  Savings and loans (mutual savings banks)  Consumer finance companies

Loans Sources to AVOID!  Credit card cash advances  Refund anticipation loans  Payday loans  Pawnshops  Loan sharks  Rate limit varies by state Do you want cash back? YES NO

Which of the following would be the most expensive source for a loan?  Payday loan  Reputable bank  Credit union  Savings and loan  Consumer finance company

Which of the following would be the most expensive source for a loan?  Payday loan  Reputable bank  Credit union  Savings and loan  Consumer finance company

What do you think? Discussion © EMC Publishing, LLC Why would someone take a payday or other high-interest loan? What alternatives should she or he consider? What do you think about taking a loan for your tax refund before you receive it? Is that a good way to purchase something now that you really want?