III. Credit and Credit Cards A. What is credit? Any form of deferred payment ( loan, credit card) How might credit be a positive and a negative? III. Credit and Credit Cards

III. Credit and Credit Cards B. Advantages vs. Disadvantages to credit 1. Advantages a. Emergency or if you need something now!!! b. do not have to carry cash c. build credit d. more convenient than writing checks e. consolidates bills into one payment f. payback may be reduced rate with inflated dollars III. Credit and Credit Cards

III. Credit and Credit Cards 2. Disadvantages a. Interest (creates higher cost for items) b. may require additional fees c. DEBT!!! d. poor credit harms credit score- reduces ability to use in future III. Credit and Credit Cards

III. Credit and Credit Cards C. Three C’s of Credit 1. Character- will you repay your debt? A. do you pay bills on time, used credit before, good credit report, how long have you held your job. III. Credit and Credit Cards

III. Credit and Credit Cards Three C’s cont. 2. Capital- what if you don’t repay your debt? A. do you have assets that could be used to repay debt, savings accounts, property, investments III. Credit and Credit Cards

III. Credit and Credit Cards Three C’s 3. Capacity- can you repay the debt? A. do you make enough money to repay, salary, job?, other loans, current living expenses, dependents III. Credit and Credit Cards

III. Credit and Credit Cards D. How do you establish good credit/credit report? 1. Establish steady work record 2. pay bills on time 3. open a checking account and don’t bounce checks 4. make regular deposits into savings account 5. apply for a local store credit and make regular monthly payments 6. keep low balance on card 7. get a co-signer on a loan and pay it back as agreed on loan III. Credit and Credit Cards

III. Credit and Credit Cards E. Looking for a Credit Card 1. Costs- APR (annual percentage rate) 2. Terms- credit limits, where is card accepted, services available 3. look at various credit card companies-just like shopping for clothes 4. Finance charges- know the penalties 5. know your costs- make largest payments possible, look at statements. III. Credit and Credit Cards