1 Get Smart About Credit $$$$$$$$$$$$. 2 Marsha A. Goetting Ph.D., CFP ®, CFCS è Professor & Extension Family Economics Specialist è Department of Agricultural.

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Presentation transcript:

1 Get Smart About Credit $$$$$$$$$$$$

2 Marsha A. Goetting Ph.D., CFP ®, CFCS è Professor & Extension Family Economics Specialist è Department of Agricultural Economics & Economics

3 Warm up & fun questions about credit $$$$$$$$$$$$

4 Question ä What is the average combined education loans & credit card balances forcollege seniors?

5 Average combined education loans & credit card debt $20,402

6 Graduating seniors student loan debt $17,140

7 Graduating seniors credit card debt $3,262

8 Question ä How many credit cards does average American household use?

9 Credit Cards the Average household uses 8

10 Question ä What’s the average creditcard balance owed by American households?

11 Credit Card Balance… $8,000

12 Question ä What is the average credit card balance of senior citizens?

13 Senior Citizen Balance $4,041

14 Question ä What percent of credit card holders say they hardly ever pay the balance in full?

15 Hardly ever pay in full 35%

16 Packet Contents $$$$$$$$$$$$

17 Credit Card Smarts Calculator SpecialFeature

18 Blue Side--Side 1 ä Paying Just 2% on Your Credit Card Debt ä Check the REAL cost

19 Credit Card Debt ä Julie ä $2,000

20 Side 1-Blue ä Pay Back: $6,183 ä Interest Charges: $4,183 ä Years to pay off: 23

21 Yellow Side 2 ä Pay MORE than 2% and Save a LOT

22 Side 2-Yellow n $2,000 debt n First payment: $40 n Years in debt: 23 n Interest paid: $4,183

23 Boost to 3% n First payment: $60 n Years in debt: 11 n Interest paid: $1,654 n Interest saved: $2,529

24 Double Minimum n First payment: $80 n Years in debt: 8 n Interest paid: $1,051 n Interest saved: $3,132

25 Worksheet--White ä My Credit Card Situation ä ??????

26 $ for extra payments n Purple Worksheet n The Case of the Missing Money, or the $645 Snack, or Where Can I Find Money to Boost My Monthly Credit Card Payments

27 $ for extra payments n List the Item n Cost per day n Cost per week (day x 5 or 7) n Cost per month (week x 4) n Cost per year (month x 12)

28 Credit Report ä Fact Sheet (salmon color) ä How to Get Your Free Credit Report

29 3 Nationwide agencies n Annual Credit Report Report Request Form

30 Credit Score n Fact Sheet (green) n What Does Your Credit Score Say About You

31 FICO Score n Payment history n Amount owed n Length of credit history n New credit n Types of credit in use

32 Boosting Scores n Pay bills on time n Keep low balances n Pay off debt n Apply for new only when needed

33 Debt ä Fact sheet ä (dark yellow) ä How much debt is too much ?

34 Debt Ratio n A. Outstanding loan balance n B. Take home pay n C. Divide A by B

35 Debt ratio n 1/3 limit n Of what’s left after you’ve paid your basic living expenses

36 Question ä Housing Debt ä 1/4 to 1/3 of monthly take home pay

37 Housing Debt ä Shouldn’t be more than 2 to 2 ½ times before-tax annual income

38 PowerPay ä Fact Sheet ä Reduce Your Debts the PowerPay Way

39 Pay credit payments as usual ä First loan: $150 ä Second loan: $50 ä Third loan: $75 ä Total $275

40 PowerPay ä When first loan is paid off, that payment is applied to the next loan

41 First Loan Paid Off ä First loan: 0 ä Second loan: ä $150 + $50 = $200 ä Third loan: $75 ä Total $275

42 PowerPay ä When loan 2 is paid off, add that payment to next loan

43 Second Loan Paid Off ä 1st & 2nd loan: 0 ä Third loan: $275 ä ($150 + $75 + $50) ä Total $275

44 PowerPay ä Continue until all loans are paid off

45 Benefits ä Reduce time on loan ä Save in interest costs

46 3 Ways n On-line n Purchase CD n Complete form

47 Selecting a Credit Card MontGuide Fact Sheet

48 Purposes ä 1. Compare credit card terms already accepted with offers received in mail and/or over phone

49 Purpose ä 2. Find credit cards with terms best suited for your spending & repayment habits

50 Federal Truth in Lending Law

51 Schumer Box APR 19.9% Grace Period Not less than 25 days Finance Charges.50 Annual Fees $20 per year

52 Schumer Box ä Annual Percentage Rate ä Grace Period ä Minimum Finance Charges ä Balance Calculation Method ä Annual Fees ä Fees for Cash Advances ä Late Payment Fees

53 Packet Feature n Credit Card Tracker n Date n Description of charge n Amount Charged

54 Packet sponsors n MSU Extension Service n First Interstate BancSystem Foundation n Montana Credit Unions for Community Development

55 Evaluation n Blue Form n Return in envelope by April 15 n eligible for $100 savings bond

56 Get Smart About Credit $$$$$$$$$$$$