1. Take Charge of Credit Cards
© 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

2. 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 creditor is saying in effect, he believes the borrower is willing and able to keep his promise to pay the money back plus interest. You are making a promise and an agreement, giving your word you will pay back the money. IT is NOT free money!!!
© 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

3. 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
Grace Period – Amount of time allowed before finance charges are applied
© 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

4. 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
© 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

5. Fair Truth in Lending Act
Schumer Box
Fair Truth in Lending Act
Information required by law to inform consumer of all costs associated with use of a credit card
Annual Percentage Rate for Purchases
Grace Period for Purchases
Minimum Finance Charges
Balance Calculation Method for Purchases
Annual Fees
Transaction Fees for Cash Advances
Late Payment Fees
19.9%
Not less than
25 days
$.50 when a finance charge at a periodic rate is charged
Average daily balance method (including new purchases)
$20 per year
2% with a minimum fee of $3
$29
© Family Economics & Financial Education – Revised October 2004 – Credit Unit – Selecting a Credit Card
Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences at the University of Arizona

6. Advantages Brainstorm 3 advantages of using a credit card Convenient
Useful for emergencies
Often required to hold a reservation
Purchase expensive items earlier
Eliminate the need to carry around large amounts of cash
© 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

7. Disadvantages Brainstorm 3 disadvantages of using a credit card
Paying interest
Additional fees are common
Tempting to overspend
Responsible for lost/stolen cards
Identity theft is easier
Can cause large amounts of debt
© 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

8. 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
© 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

9. 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
© 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

10. Assignment
Reading the Credit Card Statement (practicalmoneyskills.com activity 8-2a)
Taking Credit By The Horns (FEFE worksheet A1)
© 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