Credit Cards Plastic Money!
Credit Cards 90% of credit card purchases are impulse purchases! Only 54% of card owners pay off their balances each month!
Types of Cards Charge Cards ▫No pre-set spending limit ▫Must be paid in full each month American Express Credit Cards ▫Pre-set spending limit ▫Allow you to carry a balance As long as you pay the minimum monthly payment ▫VISA, Mastercard
Credit Cards - Interest Rates vary on different cards ▫Range from 15% - 25% annually ▫Interest charged daily Daily rate = annual rate divided by 365 Charged on all balances after due date ▫Interest is backdated to the date of purchase
Credit Cards - Interest Interest is charged on cash advances immediately ▫No grace period, interest accumulates immediately
Credit Cards – Days Late Be careful calculating the number of days late… ▫Example A Purchase made on December 3 rd – not paid until January 5 th. ▫How many days in December didn’t you have it? 2 Days in December = = 29 ▫How many days in January did you have it? 5 Total = = 34 days
Credit Cards Example ▫Monica makes a $400 purchase on her VISA on January 5 th. ▫She receives her statement on the 20 th, but does not pay it. ▫ Her next statement arrives on February 20 th. ▫Calculate the interest she is charged if her annual interest rate is 21%.