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 Take Charge of 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 Brainstorm 3 advantages of using a credit card

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 Brainstorm 3 disadvantages of using a credit card

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 Receiving a credit card Credit Application A form requesting information about a person’s ability to repay debt Completed by the consumer This step may be skipped if the consumer has been “pre-approved” by the credit card company Credit Investigation A comparison of information on a credit card application to their credit report Conducted by the credit card company Award or denial of credit Consumer receives the credit card and can activate and begin using it Consumer does not receive a credit card. They can request information about why they were denied credit.

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 Safety Tips Shred any unwanted credit card offers or credit cards received in the mail Always check your credit card statement to make sure there are no false purchases Sign card with signature and “Please See ID” Do not leave cards lying around Close unused accounts in writing and by phone, then cut up the card

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 Safety Tips continued Do not give out account number unless making secure purchases Keep a list of all cards, their account numbers, and phone numbers separate from cards Report lost or stolen cards promptly

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 Charges, payments, and credits Understanding the bill Charges, payments, and credits – The transactions which occur with the use of a credit card  Important to keep receipts to compare them to the bill for accuracy Closing date – Last day for transactions to be reported on the statement Closing 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 Finance charges Understanding the bill Finance charge – Charges assessed for credit card use Minimum payment due – The minimum amount to be paid  If this amount is paid and a balance is left on the account, additional finance charges will be included in the following month’s balance Minimum payment due

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 Understanding the bill Due date – The day by which the company requires a payment to be made Past due amount – The required amount not paid before the due date 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 Understanding the bill New balance – The total amount owed on a credit card Credit Line – The maximum amount of charges allowed to an account New balance Credit line

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 Understanding the bill Over the limit fee – credit card companies will charge consumers a fee if they charge over their limit within one month Over the limit fee

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 Understanding the bill Balance transfer – Transfer the balance from one card to another  Companies will advertise a lower interest rate for balance transfers  These are often introductory rates and will only last for a short time

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 Remember…. Only use a credit card when there is no doubt about ability to pay off the charges at the end of the month