1. Credit Cards An Introduction “Hi! Nice to meet you!”

2. Some questions  What does it mean to take “personal responsibility” for something? Give an example of a situation where you have taken responsibility for making sure something got done.  Have you ever borrowed money from someone? What agreement did you make with them about paying the money back? Did you?  Have you ever given a loan to someone? What was the agreement? Did you get it in writing?  Why might someone want to make a purchase with a credit card instead of buying it with cash?

3. Credit  Ability of a person or business to borrow money from a lender with the promise to pay it back  Earning credit requires trust

4. Credit History  Determines whether you can borrow money from a bank (a loan) for a house, car, etc.  Shows whether you are responsible in making payments overtime  Follows you your whole life – you want good credit history

5. How to get a credit card…

6.  You can apply for a credit card when you’re 18 years old 1) The lender will first want to know what your income is 2) They’ll want to know your history of paying bills ontime.  If they approve of all of these things, you will get a credit card!

7. Interest  The fee lenders charge for lending you money  Expressed as Annual Percentage Rate (APR) which is the percentage interest charged on the loan over a year  If you pay off your loan every month, you do not have to pay interest  You usually want to shop for a credit card with a low interest rate

8. Credit Card Limit  The max amount you can charge to your credit card (set by the lender)

9. Annual Fee  Some credit cards charge an annual fee and are usually associated with some sort of bonus (eg. travel points, rewards, etc.)  If you don’t pay the annual fee on time you will be charged a late fee

10. Bad Credit  Happens when you don’t make a payment, or you make a late payment  May be charged a late fee or a higher interest rate as a penalty

11. Bottom Line… IT’S IMPORTANT TO KNOW THE INS AND OUTS OF YOUR CREDIT CARD!!!

12. Ex. 1 You charge $100 on a credit card that has a limit of $300. The card has an annual interest rate of 18%. Estimate how long it will take you to pay off the total charge if you pay $20 a month.

13. Ex.2 At 18% a year, what will the interest be on the unpaid $80 balance at the end of the first month?

14. Ex. 3 On the $100 charge, how much will your outstanding balance be at the end of the first month, if you only make a payment of $5?

15. Ex. 4 How are balances determined?