1. Charge It Right 1

2. 2 Purpose Charge It Right will teach you about credit cards and how to use them responsibly.

3. Charge It Right 3 Objectives By the end of this course, you will be able to: Describe the purpose of credit cards. Determine which credit card is best for you. Identify the factors creditors look for when making credit decisions.

4. Charge It Right 4 Objectives (Continued) Describe how to use a credit card responsibly. Identify the steps to take when a credit card is lost or stolen.

5. Charge It Right 5 Credit Cards Credit cards: Are a convenient form of borrowing. Give you a revolving line of credit. Require a minimum payment each month.

6. Charge It Right 6 Other Cards Cash cards Smart cards Stored value cards

7. Charge It Right 7 Secured and Unsecured Cards You do not have to provide “collateral” in order to get a credit card. A credit card is an “unsecured” loan. You can get a “secured” credit card if you have no credit history or a negative credit history.

8. Charge It Right 8 Gold and Platinum Cards These cards: Have a higher credit limit. Require good credit history and higher income. May not have favorable terms.

9. Charge It Right 9 Reward Cards These cards: Are offered by hotels and airlines. Charge an annual fee. May give you cash rebates

10. Charge It Right 10 Pre-approved Card Offers Credit card companies look at your credit report and determine that you MIGHT qualify for the interest rates and credit limit being offered. Whether or not you get the best terms depends on your income, employment, and credit history. Shop for the best terms.

11. Charge It Right 11 Credit Card Terms Annual percentage rate (APR) Fees Grace period Balance computation method Cash advance Balance transfer

12. Charge It Right 12 Annual Percentage Rate Interest rate + fees = APR, expressed as a yearly percentage rate APRs are either fixed or variable. Penalty APRs are about 52 percent higher than regular APRs. Credit card companies must state how long “introductory” APRs last.

13. Charge It Right 13 Fees Annual fees Late fees Over-the-limit fees Balance transfer fees Cash advance fees

14. Charge It Right 14 Grace Period The number of days you have to pay your balance before the credit card company starts charging interest.

15. Charge It Right 15 Balance Computation Method The balance computation method will determine how your interest is calculated. The most common method used is the average daily balance.

16. Charge It Right 16 Cash Advance The ability to get cash from your credit card. Credit card companies charge a fee for this service. Example: 2%/$10 The cash advance fee is 2 percent of the cash advance amount or $10, whichever is greater.

17. Charge It Right 17 Balance Transfer Balance transfer is the process of moving unpaid credit card debt from one credit card to another. Credit card companies sometimes offer low rates to encourage balance transfers coming in.

18. Charge It Right 18 Other Factors to Consider Customer service Additional protection

19. Charge It Right 19 Application Requirements Individual credit – based on the assets, income, and credit history of the individual Joint credit – based on the assets, income, and credit history of both people who apply. Age requirement – 18 years old

20. Charge It Right 20 Credit Report A credit report is a record of how you have paid your debts. It tells lenders: Who you are. How much debt you have. Whether you have made payments on time.

21. Charge It Right 21 Credit Report (Continued) Whether there is negative information about you in public records. Inquiries made about you.

22. Charge It Right 22 Credit Reporting Agencies Equifax Experian TransUnion

23. Charge It Right 23 Credit Score The credit score: A number that predicts how much of a credit risk you will be. Calculated based on information in your credit report. Check your credit score before applying for new credit.

24. Charge It Right 24 FICO Score Scores range from about 300 to 900. Takes into account: –Past payment history – 35 percent –Outstanding debt – 30 percent –How long you've had credit – 15 percent –New applications for credit – 10 percent –Types of credit – 10 percent

25. Charge It Right 25 VantageScore Was introduced in March of 2006. 3 credit reporting agencies use the same scoring system. Scores range from 501 – 990. A, B, C, D, F

26. Charge It Right 26 Denial Notice Lists the reasons for denying credit, such as: You have a bad credit history. You have not been at your current address or job long enough. Your income does not meet the creditor’s criteria. Also called an “adverse action” notice.

27. Charge It Right 27 Lost or Stolen Credit Card Be careful giving personal information over the telephone or on the Internet. Immediately notify your credit card company if your card is lost or stolen. If you think you are a victim of credit card fraud, immediately contact your credit card issuer.

28. Charge It Right 28 Credit Limit This is the maximum amount of money the credit card company is loaning you. If you go beyond this limit, the credit card company will assess an over-the-limit fee.

29. Charge It Right 29 ItemPriceAPR Interest Paid How Much You Really Pay for the Item Total Years to Pay Off TV$50018%$216$7165 Computer$1,00018%$516$1,5167 Furniture$2,50018%$1,415$3,91510 Cost of Making the Minimum Payment

30. Charge It Right 30 Original Balance APR Monthly Payments Total Number of Monthly Payments Total Years to Pay Off Total of Payments $2,50018% Minimum Payment (MP) 12310$3,915 $2,50018%MP + $25504$3,258 $2,50018%MP + $50333$2,839 Benefit of Making More Than the Minimum Payment

31. Charge It Right 31 Original Balance APR Monthly Payments Total Number of Monthly Payments Total Years to Pay Off Total of Payments $1,00018% Minimum Payment (MP) 877$1,516 $1,00018%MP + $25262$1,187 $1,00018%MP + $50161$1,119 Benefit of Making More Than the Minimum Payment

32. Charge It Right 32 Credit Card Statement The front of the statement lists detailed activity during the account billing cycle. The reverse side describes some basic terms of your credit card agreement, including how the interest is calculated and where to call with billing questions.