Presentation on theme: "Consumer Action: Use Credit Wisely Consumer Action created this project in partnership with USE CREDIT WISELY."— Presentation transcript:
Consumer Action: Use Credit Wisely Consumer Action created this project in partnership with USE CREDIT WISELY
Consumer Action: Use Credit Wisely Advantages of Credit What can credit do for you? Help you through a financial emergency Enable you to pay for a purchase over time Provide a short, interest-free loan Enable you to rent a car, hotel room, etc. Offer convenience, security when shopping Rebates or rewards Allow you to avoid carrying cash Allow you establish credit/build good credit
Consumer Action: Use Credit Wisely Types of Credit Installment Credit Fixed number of monthly payments Car loans, mortgages Revolving Credit Short-term, open-ended Assigned credit limit Available credit fluctuates as you make purchases & payments Option to make full or partial payment HELOCs, credit cards
Consumer Action: Use Credit Wisely Credit Card Terms Credit limit Method of computing the balance Minimum payment Payment due date Grace period Interest rate Fees
Consumer Action: Use Credit Wisely Credit Card Terms: Interest The lender’s fee for allowing you to use its money Expressed as a percentage of the credit Fixed vs variable interest rate Annual percentage rate (APR) Periodic interest rate Different rates for a single card: Teaser Cash advance Purchase Penalty/Default Balance transfer Effective interest
Consumer Action: Use Credit Wisely Activity: Credit Card Jeopardy Break into three groups Choose one person on your team to “buzz” in when you think you have the correct “question” to the answer A correct answer earns the point. An incorrect answer loses a point and allows another team to “steal” the point. Remember to phrase your answer in the form of a question.
Consumer Action: Use Credit Wisely Credit Card Billing Statements Opening/closing date Past due amount New balance Minimum payment due Due date Account summary Transactions Rewards information Explanation of finance charges Effective APR
Consumer Action: Use Credit Wisely Food for Thought In 2007, credit card customers who revolved their debt (didn’t pay the balance in full each month) paid $18.1 billion in penalty fees to credit card companies. Source: “Don’t Get Clobbered By Credit Cards,” by Gary Weiss
Consumer Action: Use Credit Wisely Activity: Credit Card Match-Up Break into groups Answer the questions for each scenario based on what you have learned so far There may be more than one “right” answer to each question Choose a spokesperson to explain your choices
Consumer Action: Use Credit Wisely Using Credit Wisely Know your credit limit and don’t exceed it Charge only as much as you can repay Pay more than the minimum, if possible Pay by your due date (and time!) Use a debit card, not a credit card, to get cash Don’t accumulate too much debt Avoid penalty fees and rates Consider optional fee-based services carefully Contact a credit counselor (www.nfcc.org or www.aiccca.org)
Consumer Action: Use Credit Wisely Congratulations! You’ve completed the ‘Use Credit Wisely’ training!