1. Citizens for Responsible Lending www.citizensforresponsiblelending.org How Credit Works For Me

2. Think of credit like Warfarin. When needed, a little thins your blood and will save your life. But just a little too much can kill you.

3. How Credit Works For Me Credit works for me by increasing my checking account and savings account balances more than I would have been able to without using credit and without reducing my equity “Equity” is all my assets, the things of economic value that I own, especially cash and things which could be converted to cash: automobiles, real estate, investments and savings.

4. When can I use credit? When my monthly income is high enough that I pay all my bills, make monthly deposits to increase checking account and savings account balances each month, and still have enough to make the credit payment.

5. Example 1 Credit allows me to take advantage of a temporary low price on something I would have bought in the future.

6. Credit allows me to put new tires on my car a little earlier because of a legitimate low sale price. “Buy 3, get the 4 th free” is the normal price... but if free mount, balance and valve stem is included too it might be worth credit for 4 months.

7. Credit allows me to replace a failing appliance, computer or TV a little earlier because of a legitimate low sale price. If the same model I would have purchased is on a temporary sale for 30% off it might be worth 3 months credit. 10% off is the normal price… but a scratch-and-dent model for 40% off might be worth 6 months credit.

8. Example 2 The credit repayments may reduce my monthly deposits into my savings and checking accounts… but after the credit is paid off, my monthly deposits into my savings and checking accounts will increase from the savings in expenses created by the use of credit.

9. Instead of taking my clothes to the laundromat I will use credit to install a new washer and dryer in my home. After I have paid off the credit, I will increase the amount deposited into checking and savings from money saved by not using the Laundromat in addition to restoring my original deposit amount

10. Instead of repairing my old refrigerator, I use credit to buy a new larger refrigerator. I can take advantage of saving on my food budget ◦ food purchased on sale at lower cost ◦ store it for longer periods of time and use the savings to increase my checking and savings deposits.

11. Instead of waiting until a small roof leak has caused major damage, I will use credit to hire someone to repair the roof when I first notice the leak. This saves major expense at a future date, allowing me to continue regular monthly deposits to increase my checking and savings account balances. Example 3

12. After the last payment is made, I start putting the original monthly payment amount plus the savings (on food, laundry, etc.) into my checking and savings accounts.

13. How Credit Works for Me Recap Legitimate temporary low price Savings in expenses Buy new instead of repairing obsolete appliance Avoid larger expense later

14. How Credit Works for Me Credit works for me by increasing my checking account and savings account balances faster than if I had not used credit.