1. Credit and Consumer Rights
Ch. 20

2. Credit Buy goods & services at individual stores & pay for them later
Credit limit - maximum amount a person can buy with the promise of payment
Principle – actual cost of the good or service
Interest – cost of borrowing money (the extra you pay to borrow money

3. Types of Charge Accounts
Installment Account - Repaid with equal payments over a certain period of time. Part of the payment goes towards interest & part towards the principle - Car loan or mortgage
Regular Account - No interest is charged if entire bill is paid on time – If you do not pay the entire bill on time, then you must pay interest on the entire loan amount.
Account can’t be used again until the balance is paid
Furniture Stores usually do this. Pay by 2025, certain amount each month, but with no interest.
3. Revolving Account - Billing cycles where a bill is sent at the end. Interest charged on portion not paid. Account can still be used until credit limit is reached - Credit Cards

4. Credit Cards Make purchases without having the money
Charge high interest rates
Lower interest rates if the customer is reliable (Makes payments on time!!!)
Finance Charges – Cost of credit (interest) expressed in dollars
Annual Percentage Rate – Cost of credit (interest) expressed as a percentage

5. Applying for Credit Credit Rating Fill out application
Credit Bureau does a credit check
Creditor may ask for references
Credit checks show your income, debt and ability to pay past debts
Credit Rating
Rating of risk: Excellent, Good, Average or Poor
Ratings have a number associated with them
3 Credit Bureaus: Experian, Transunion & Equifax
Gives lenders an idea of reliability when issuing loans Higher Credit Score = less interest you are charged on a loan = saving $
Types of Loans
Unsecured loans – loan based on reputation
Secured loans – have collateral to back up the loan

6. Credit Bureaus

7. Government Regulations
Equal Credit Opportunity Act: a person can’t be denied credit because of race, religion, national origin, gender, marital status or age
Usury Laws: Restrict the amount of interest companies, not banks, can charge
Bankruptcy
Debts are so large they can’t be paid back
Most of what a debtor owns is sold or given to creditors
Takes about10 years to reestablish credit
States can become bankrupt too

8. Consumer Rights Consumer – someone who buys a product or service
Types of Income
Disposable Income – money after taxes taken out.
Money to pay for house, car, etc.
Discretionary Income – money remaining after paying for necessities
Either save or spend it

9. Consumerism – a movement to educate buyers on purchases and to make sure products are safe
Congressional laws – Pure Food and Drug Act in 1906
Private groups – Better Business Bureau (BBB)
Consumer Bill of Rights
Consumers have…
Right to a safe product
Right to be informed
Right to choose
Right to be heard
Right to redress (to remedy or set right a wrong/grievance)

10. Consumer Responsibilities
Smart Buying Strategies
Get info on products
Watch out for advertising
Comparison shopping – find out prices on product from different stores/internet
Brand Name vs. Generic
When product fails
Report it
Check the warranty
Keep a copy of the receipt
Be calm
Make Fair complaints