1 Unit Five Credit: Buy Now, Pay Later To use credit wisely you C need to know oming soon to a what s really mailbox near you credit card offers! involved. If you haven t started receiving them already, you will. Credit card companies will dazzle you with some very tempting offers, usually during your senior year or shortly thereafter. Credit cards are only one type of credit offered by financial service companies, and like any tool, they can be used wisely or poorly. Some types of credit work well only in certain situations, but they all follow the same basic pattern: buy what you want now, and pay for it later. It sounds like a good deal, but there is a catch! 59
2 Some of the questions you will be able to answer by the end of this unit are: What is credit? What does it cost to use credit? What are the advantages of using credit? Where can you get credit? What questions should you ask yourself before you use credit? What happens if you misuse credit? Overview: Credit 101 Knowledge is power, as the saying goes. To use credit wisely you need to know what s really involved. Credit means someone is willing to loan you money called principal in exchange for your promise to pay it back, usually with interest. Interest is the amount you pay to use someone else s money. The higher the interest rate, the greater the costs of using credit. In fact, the biggest cost of using credit is the interest rate, so it pays to shop around, and lenders make it easy to compare costs. All interest rates are quoted as Can You Believe? With a partner, fill in the following: % of students with a credit card don t repay the entire balance each month. % of teenagers say they have never discussed using credit cards responsibly with a family member. % of teenagers say they are pretty familiar with credit cards. % of teenagers have access to a parent s credit card. % of teenagers aged already have a credit card in their own name. Answer Key: 28, 68, 56, 9, 31 60
3 an annual percentage rate (APR). The APR is the amount it costs you a year to use credit, expressed as a percentage rate. It includes the interest, transaction fees, and service charges. In addition to the APR, there may be other costs of using credit. The following fees and charges apply to various kinds of credit. Figure 5.1 Annual fee. Most often used by credit cards companies, an annual fee is a yearly charge for the privilege of using credit. Finance charge. This is the actual dollar cost of using credit, which is calculated by a lender. Origination fee. An origination fee, usually associated with home loans, is a charge for setting up a loan. Another key piece of information you need in order to use credit wisely is the loan term, or how long the loan lasts. The longer the loan term, the greater the cost of using credit. That s because the longer you keep a balance on a card, the more money you have to pay in interest over that time. Let s take a closer look at the price of using credit. Credit Costs In Unit 4 we saw how compounding helps you earn money on your savings and investments. But we also learned that compounding can work against you in the form of inflation. The bad news is that credit is another instance where compounding can work against you. Loan Length. Figure 5.1 compares two loans, both with an interest rate of 8% and an identical amount of $1,000. But, they have different loan lengths. The first is a four-year loan, while the second has a six-year term. Notice that it costs an extra $90 for an additional two years of loan payments. That doesn t sound like much until you think of it as an extra $90 per $1,000 borrowed. Imagine the additional costs if you were looking at a $10,000 loan or even a $100,000 loan! To put it in perspective, let s say you ve found the house of your dreams. You take out a $100,000 loan at 10% with a loan term of 30 years a common length for a house. How much will you really be paying for your home, if you pay off the loan as scheduled? Take a look at Figure
4 Figure 5.2 The Impact Over the Long Term x x In effect, you bought one house but paid for three! The point? The longer the length of the loan, the greater the overall cost to you. Figure 5.3 The Impact of a Higher Rate Interest rate. Here s another way to look at it. Figure 5.3 compares two loans, both for $1,000 for five years, but with different interest rates. The first loan has a rate of 9%, while the second is 12%. In this example, the higher interest rate means the loan costs an additional $88. Again, that s not a lot of money, but if you think of a loan for tens of thousands of dollars, higher rates can add substantial costs to borrowing. The cost of credit should be included in your decision when you are considering borrowing money. Remember: High interest rates mean that the borrowed money costs more to use. 62
5 Credit Benefits Now that you know some of the costs, you may be wondering if using credit is worthwhile. As with many financial tools, it depends on your situation. Credit does have potential benefits, if you use it responsibly. And that s the key. Here are some examples of responsible credit use. Access to cash in an emergency. When you need money to pay for something in an emergency, like a tow truck if your car breaks down, having credit can get you back on the road quickly. The ability to use it now. Credit allows you to own or benefit from the use of large purchases now, such as a car or a house. Without credit, most families would probably not be able to buy a home or even a new car. Safety and convenience. If you can charge a purchase on a credit card, you can avoid carrying large amounts of cash. When you re traveling, major expenses like hotel rooms, airfare and car rentals can all be put on credit cards. Also, many purchases can be made over the phone from catalogs or on the Internet with a credit card. Earn bonus points or miles. Credit card issuers frequently advertise that cardholders can earn bonus miles or points on purchases or receive cash back periodically. Although this feature seems like an attractive benefit, it usually isn t free. Cardholders typically pay for credit card bonuses through a higher interest rate or fee. Smart consumers weigh the value of bonus miles against the higher cost of using a particular card. Sources of Credit Where do you get credit? Lots of places. Banks and credit unions offer credit cards, car loans, personal loans, and home loans. Auto dealers often provide financing for cars, and many department stores offer their own credit cards. Colleges, financial institutions, and the federal government offer student loans for education. Let s look more closely at the specifics of some of these forms of credit. Credit Cards A credit card is synonymous with buy now, pay later. Credit card companies have made it easy and convenient to use their cards for purchases and to get cash when you want it. Gas stations, restaurants, movie theatres everywhere you turn you see signs saying credit cards are accepted. Unfortunately, ease of use often translates into big bills down the road. Unlike many forms of credit, there is no loan term with credit cards. That means you can pay the balance owed over a varied and extended time, and that s where many people get into trouble. Of course, the longer you take to pay the balance owed on your credit card, the more it costs you in finance charges. 63
6 How can you use credit cards to your advantage? It helps to know some basic terms: Annual Percentage Rate (APR). We ve already learned something about APR, but credit cards can carry APRs that run as high as 20%. At that rate, you know what damage compounding can do to your wallet, so compare all costs on credit cards and look for the lowest rates, especially if you do not expect to pay your balance in full each month. Annual Fee. Some cards charge an annual fee, and some don t. To save money, look for cards with no annual fees. Grace Period. Most cards offer a grace period, which is the number of days during which no interest or finance charges will apply. The key is to pay off the entire balance of your card during the grace period. If you don t, you ll pay a finance charge. Twentyfive days is a typical grace period. Minimum Payment. Many cards require a minimum monthly payment of about 2% of your credit card purchases. Some set a minimum dollar payment, such as $15 per month. While making small payments like these may seem easy, remember that the remainder of your balance due is now compounding at the card s APR. The best strategy is to pay your balance in full each month; that way you avoid interest charges altogether. Credit Limit. All cards come with a limit establishing how much you can charge. This maximum is called the credit limit. Once you ve reached your limit say $500 your card is maxed out. At that point, you can t make any new purchases until you pay down the balance owed. Higher limits may sound good, but you need discipline to avoid running up big loan amounts. If you re tempted to overspend, remember that big purchases quickly compound into big interest payments with high APRs. You re the one who will pay for it. To help you shop for the best credit card, make a chart like the one in Assignment 5.1. Compare at least three different cards. You can shop on the Internet, or ask your parents to save some of the credit card offers they receive in the mail. Assignment 5.1 Shopping for the Best Credit Card Card Annual Grace Minimum Credit Other Name APR Fee Period Payment Limit Fees/Notes 64
7 How Long Can It Take? Imagine you ve graduated. You re living on your own, and you have a credit card in your own name. With a $500 credit limit, you ve maxedout your card in just a few days. At an APR of 18% and an easy minimum payment of only $15 a month, how long will it take you to pay off your card? Almost four years! Plus you ll have paid about $180 in finance charges. And this assumes you don t make any new purchases on the card for almost four years. Is that so bad? It depends on your plan. Would you have been wiser to have waited and saved the money for the purchases and saved that $180 in interest? Now let s look at the same scenario, but with different dollar amounts. Assume you have a $2,000 credit limit, and it s maxed out. But you don t plan to make any more purchases until the card is paid off. This card requires a minimum payment of 2% of the balance, or $20, whichever is greater. How long will it take you to pay off this card? It will take more than 18 years! Total finance charge? Over $3,500. You ll spend about $5,500 over 18 years so you can enjoy $2,000 worth of purchases today. That s the price of choosing instant satisfaction over delayed gratification. Many times you are going to be better off saving your money and paying cash instead of borrowing. Installment Loans If you need a loan for a large Paper purchase, such as a car or an appliance, you can take out an or Plastic? installment loan. Installment loans require you to make a credit card payments on a regular basis, usually monthly, until the loan is paid off. Banks and credit unions offer installment shopped with loans for many purposes, while car dealers offer them only for cash auto purchases. instead. Interest rates on installment loans are generally lower than credit card rates. Credit cards let you vary how much you borrow and pay back from month to month. With installment loans, however, you typically meet with a loan officer and borrow a set amount. After that, the loan amount, loan term, and your payments are fixed for the life of the loan. Consumers with spend up to 33% more than if they 65
8 Assignment 5.2 The Impact of Different Loan Factors Using a financial function calculator or a loan calculator from the Internet, complete the chart for the following loans. Notice that loan length and monthly payments are the two variables. Loan balance Interest rate Monthly payment Loan length Finance charge a. $5,000 10% 4 years b. $5,000 10% 6 years c. $5,000 12% 6 years d. $5,000 12% $200 e. $1,000 8% 2 years f. $1,000 19% $20 g. $1,000 12% 5 years 66 Consumer loan terms typically run from two to six years. For example, consider an auto loan. Assume you borrow $10,000 at 9% interest for 48 months. Your payment will be about $249 per month. At the end of four years, you will have paid the lender about $11,950. Thus, borrowing increased the cost of the car about 20%. If you can, it s usually best to pay off a loan early. But with any type of loan, it s a good idea to check for prepayment penalties. These are penalties for paying off your loan early. Lenders sometimes charge prepayment penalties because they will be losing the interest you would have paid over the remainder of your loan. Student Loans If you re heading off to college, you may need some help paying for it. If so, you might be interested in a student loan. In addition to banks and credit unions, the federal government also makes loan dollars available to pay for higher education. Student loans, especially those offered by the government, usually carry low interest rates in the 4% to 8% range. Depending on your income level, some of the borrowing programs allow you to delay making payments until you finish your education. Another way the government encourages you to further your education is by giving you a tax break for education costs when you file your taxes. Mortgages If you buy a home some day, you ll probably need to take out a mortgage loan like we discussed in the example in Figure 5.2. It works much like an installment loan, except the length of the mortgage extends over a long period of time usually 15 to 30 years and the amount borrowed is usually much larger. Interest rates on mortgages are usually lower than installment loans, and, like education loans, you get a tax break on interest paid to a lender.
9 Setting Limits on Credit With so much credit floating around, it s wise to set some reasonable and responsible limits. Here are some rules of thumb to help you. You ll want to adjust them to fit the goals and values reflected in your financial plan. How much is too much? A maximum of 20% of your net income your takehome pay after taxes should go toward all of your loan payments (excluding a mortgage). That means your credit card payments, car loan, and any other loans you have should add up to less than 20% of your pay. To be safe, keep it to 15% or less. For instance, assume your take home pay is $1,000 per month from a full-time job. No more than $200 a month should be going toward your car payment, credit card payments, etc. That s not much, and it s another reason to seriously consider your career plan, since it will have a direct effect on your income. What about home loans? Most lenders don t want to see more than 33% of your take-home pay going for a mortgage payment. Assuming you take home $1,000 a month, the most you could spend on a mortgage would be about $333. Comparing Credit Offers You can use a chart similar to the one in Assignment 5.1, Shopping for the Best Credit Card, for any type of loan or credit. Remember to check for: the APR the loan term, or length of the loan the maximum amount of the loan the minimum payment amount any annual or up-front fees any prepayment penalties additional fees, such as those for exceeding your credit limit, making a late payment, or bouncing a check to the lender, and the amount of income you need to qualify for the credit. Credit Reports Having a high school diploma or college degree is the first step towards ensuring a successful career. Similarly, your credit report can be your first step in guaranteeing future loans when you need them. Your credit report will be with you for a long time, so make it shine! Your Credit Record A credit report is simply your credit history, a record of your personal (or family) financial transactions. When you apply for a loan, lenders review it to see how well you have managed credit in the past. Your credit report contains information about loans you ve applied for, loan amounts you received, and whether you paid your bills on time or not at all. In short, it s your credit scorecard, and it reflects your credit history for the past seven to 10 years. Every potential lender will thoroughly examine your credit report, and many employers check it when making hiring decisions. When you apply for a car loan or a credit card, the first place the lender looks is your credit report. How do you build a good credit history? When you use a checking account, don t bounce checks. When you open a savings account, make additional deposits regardless of the size on a reg- 67
10 68 ular basis. Lenders like to see consistent patterns in saving. Always pay your bills on time; it shows lenders you are responsible. When you re still in school, it s often tough to get credit on your own. One way to get started is to ask a parent or Credit Reporting Agencies. Three major companies collect information to create credit reports. Equifax, Experian (formerly TRW), and Trans Union. You can order a written copy of your credit report for around $10. You can also access your report on the Internet for a similar fee. trusted adult to co-sign with you, perhaps for a credit card. Having a co-signer is a financial responsibility: if you don t pay your bill, your cosigner is on the hook legally and financially. Once you have established credit, make your payments on time. If you handle a little credit responsibly, lenders are more willing to extend larger amounts in the future. There are other things you can do to qualify for more credit, which are discussed in the next section. Credit Scoring Many lenders use a mathematical model to produce a credit score for you. The score helps lenders predict the likelihood that you will pay your bills as promised. Your score will change over time as your financial situation changes. The factors that go into the score vary from lender to lender, but the following are generally included: Capacity. Lenders want to know if you have the ability to repay a loan, so they look at your income and employment history. A pattern of rising income and/or steady employment gives a lender more confidence. On the flip side, if you already have high loan amounts, lenders may worry that you won t be able to make your payments. Character. In essence, lenders want to know if you are trustworthy. One way they measure your character is by looking at your credit record. Paying bills on time shows personal financial responsibility. If you have used credit in the past, they want to see that you made your payments on time. Capital. Lenders take comfort in knowing you have personal items of value. In a worst-case scenario when you don t pay your bills at all, a lender might sell your personal possessions to repay the loan. Typical items of value include a car, an investment account, and, in some states, your home. Debt When you decide to use credit, the amounts you borrow add up to become your debt. Debt is the entire amount of money you owe to lenders. We discussed the upside of debt earlier you can enjoy an item or a service now. The downside of debt is that it puts a claim on your future income, and if you take on too much debt, it can derail your financial plan and your future.
11 Top Ten Questions to Ask Yourself Before You Sign on the Dotted Line. 1. Do I really need this item right now or can I wait? 2. Can I qualify for credit? 3. What is the interest rate (APR)? 4. Are there additional fees? 5. How much is the monthly payment and when is it due? 6. Can I afford to pay the monthly payments? 7. What will happen if I don't make the payments on time? 8. What will be the extra cost of using credit? 9. What will I have to give up to pay for it? (Opportunity cost) 10. All things considered, is using credit worth it? Rights and Responsibilities When you sign the application for a loan or a credit card, you are legally obligated to uphold what s written in the agreement. That means you re agreeing to repay a loan and interest on time. These are your personal financial responsibilities. If you fail to keep your part of the bargain, lenders may take legal action against you to recover what they can. As a consumer, you also have rights that lenders must respect. For instance, by law lenders must put in writing the total cost of using their credit. They must also be truthful in their advertisements. With certain types of credit, you are legally allowed to cancel a credit agreement with a lender within three days assuming you return the money borrowed. With credit cards, your responsibility to pay is limited to $50 if someone uses your card without your permission, for example, if it is stolen. How to Get Out from Under Excessive Debt Getting out from under excessive debt is a lot harder than getting into debt, but the rules are simple. In fact, there s only one: spend less than you earn! Applying it, however, is not always easy because you have to delay gratification today to clean up yesterday s mess. This is one place where your budget comes in handy. If you consistently spend less than you earn, you can use the additional money to pay off your debt. If you have several loans, try to make the minimum required payments on all of them. If you can t, always try to send at least some money to all of your lenders. Talk with them, and let them know you are doing what you can to pay them back. If there s money left after you ve made your minimum payments, use it to begin paying off one loan at a time. Start with the loan with the highest interest rate not the loan with the largest balance. You want to pay down the high-interest-rate loans first, because you know how compounding can work against you! When that loan is paid off, apply the money to the loan with the next-highest interest rate. Keep the process going until your overall debt is back under control. So remember, if you find yourself drowning in debt focus on your budget, spend less than you earn, and begin to pay off your consumer loans. If you find yourself unable to manage your debt problems, it could be helpful for you to seek the services of a nonprofit credit counselor to help you in creating a debt recovery plan and sticking to it. 69
12 Assignment 5.3 A Plan to Get Out of Debt Using the credit information below, prioritize the order of the debts to be paid. a. a car loan with a balance of $6,000, monthly payments of $250, and an interest rate of 8.9% b. a bank credit card with a balance of $800, minimum monthly payments of $20, and an interest rate of 19.5% c. a student loan with a balance of $30,000, monthly payments of $175, and an interest rate of 6% d. a store credit card with a balance of $2,300, minimum monthly payments of $70, and an interest rate of 15.9% e. a credit union credit card with a balance of $3,500, minimum monthly payments of $110, and an interest rate of 12% 70 Bankruptcy Sometimes debt can overwhelm responsible people. Illness, divorce, business losses, and other events beyond their control can bring borrowers to the point at which they can no longer make loan payments. They fall further and further behind as compounding interest on their debt grows. As a last resort, they have to consider bankruptcy. Bankruptcy is a legal process that allows someone deeply in debt to create a plan to get out of it. Unfortunately, in 2000, about 1.2 million Americans filed for bankruptcy. Many of these bankruptcies were the result of unforeseen and unavoidable misfortune. For these people bankruptcy provides a clean slate and a chance to rebuild their lives. But for many others, bankruptcies were the actions of irresponsible borrowers who simply decided to default on their obligations. Because of the growing incidence of bankruptcy abuse, Congress is considering changes in the law. Chapter 7 bankruptcy allows you to effectively erase most of your debt. To qualify, you typically must be unemployed or have a very low income. In addition, you must go through financial counseling as part of the process. Chapter 13 bankruptcy allows you to pay back some of your debts, but with more time. A court typically oversees the repayment plan to ensure accountability. Bankruptcy is very costly to everyone involved, including: Lenders, who must absorb loan losses they can t recover by raising rates on other loans and services; Responsible borrowers, who must pay higher rates to help lenders recover losses on bad loans; People who ve declared bankruptcy, whose actions remain on their credit records for up to 10 years, and who might find it harder and more expensive to borrow from wary lenders in the future.
13 What You ve Learned in Unit Five what credit is and how it works; the different costs related to using credit; some advantages of using credit; many types and sources of credit; the Top Ten Questions You Should Ask Yourself Before You Sign On The Dotted Line; and, what happens when you abuse or misuse credit. 71
14 Action Steps Lend a Helping Hand You probably don't have any credit cards in your own name yet. So, offer to "Lend a Helping Hand at home by collecting and organizing the following information for those adults in your family who do have credit cards. 1. Develop a record form using the information that follows: Name(s) on credit card: Credit card issuer s name: Address: Account number: Expiration date: Emergency telephone number, if card is lost or stolen: 2. Have your parents or guardians fill out the form and put this information in a safe place (not in their billfold or purse) in case credit cards are lost or stolen. If you do have credit cards, make sure you take these Action Steps for yourself, too. 72
Be a Savvy Credit User About 40% of credit card holders carry individual balances of less than $1,000, while about 15% individually carry total card balances of more than $10,000. Forty-eight percent of
Hands on Banking Using Credit to Your Advantage Credit Reports, Credit Scores and Dealing with Debt The Hands on Banking program is a free public service provided by Wells Fargo. You may also access the
Exercise 4A: What Info Do You Need for a Loan? What information do you think is needed to get a loan? Review several samples of loan applications to see what The Cost of Using Credit As mentioned earlier,
Using Credit to Your Advantage. Topic Overview. The Using Credit To Your Advantage topic will provide participants with all the basic information they need to understand credit what it is and how to make
Credit Workshop What I need to know about credit and lending products of financial institutions. Financial Education Supported by: Concept Checklist What will I learn today? [ ] What is Credit? [ ] Advantages/
ALL ABOUT CREDIT A free publication provided by Consolidated Credit Counseling Services of Canada, Inc., a registered charitable credit counselling and debt management organization. Consolidated Credit
Slide 1 Credit The information provided in this e-course is intended for educational purposes only and does not constitute specific advice for you as an individual. When evaluating your particular needs,
for Newcomers and New Canadians Module 2 How to Build Credit In Canada Student Workbook Welcome! This workshop is about credit. Credit is buying something now, but paying for it later. Credit can be useful
Credit Cards The Basics. Do you understand what credit is and how to use it wisely? Like many of today's teenagers and college students, you appreciate the convenience and relative safety of credit cards.
Good Debt, Bad Debt U S I N G C R E D I T W I S E L Y What is Credit? Someone is willing to lend you money (principal) in exchange for your promise to repay it, usually with interest. Interest amount you
Loan Lessons Course Objectives Learn About: Different Types of Loans How to Qualify for a Loan Different Types of Interest The Low-Down on Loans, Interest and Keeping Your Head Above Water usbank.com/financialeducation
Money Borrowing money Aims: To enable young people to explore ways of borrowing money and the advantages and possible consequences of doing so. Learning Outcomes: By the end of the session the participants
Take Charge of Credit Cards Get Ready to Take Charge of Your Finances Introductory Level What is Credit? Credit- something is received in exchange for a promise to pay back money in the future Borrower
USING CREDIT WISELY AFTER BANKRUPTCY Copyright April 2011, Legal Aid Society of Hawai`i All rights reserved. These materials may be reproduced. However, under no circumstances are persons receiving these
In this unit, you will: Learn what credit is Compare the advantages and disadvantages of using credit Outline the process of applying for credit Examine what a credit history is and why it is important
GET CREDITWISE SM SM Table Of Contents October, 2006 Credit Matters 1 An introduction Establishing Credit 3 Begin building a solid financial base Using Credit Wisely 5 Narrowing your options Monitoring
Money Math for Teens Before You Choose a Credit Card This Money Math for Teens lesson is part of a series created by Generation Money, a multimedia financial literacy initiative of the FINRA Investor Education
Hands on Banking Using Credit to Your Advantage The Hands on Banking program is a free public service provided by Wells Fargo. You may also access the program anytime at www.handsonbanking.org & www.elfuturoentusmanos.org
Teacher's Guide $ Lesson Seven Understanding Credit 01/11 understanding credit websites websites for understanding credit The internet is probably the most extensive and dynamic source of information in
CREDIT IN A NEW COUNTRY: A GUIDE TO CREDIT IN CANADA A free publication provided by Consolidated Credit Counseling Services of Canada, Inc., a registered charitable credit counselling and debt management
A COMPREHENSIVE GUIDE TO YOUR CREDIT SCORE You hear a lot of things about your credit score and how important it is, but how much do you really know about it? Courtesy of Arbor Financial Credit Union This
Hofstra North Shore-LIJ School of Medicine Office of Financial Aid Consumer Credit and Your Credit Report Joseph M. Nicolini, MHA Director of Financial Aid What We Will Cover Consumer credit and credit
The Basics of Building Credit This program was developed to help middle school students learn the basics of building credit. At the end of this lesson, you should know about all of the Key Topics below:»
MANAGING CREDIT101 TM i This book is intended as a general guide to the topics discussed, and it does not deliver accounting, personal finance, or legal advice. It is not intended, and should not be used,
Published by the NATIONAL ASSOCIATION OF CONSUMER CREDIT ADMINISTRATORS May be reproduced with appropriate credit. For more information, contact: [ ] How To Cut The Cost of Credit Distributed by: Missouri
Page 1 Why Credit is Important Page 6 How to Protect Yourself from Identity Theft Page 7 Cosigning and Money Lending Tips Page 8 How to Avoid Credit Card Interest Why Credit is Important Learning to build
Paying for a Car 4 MONEY MATTERS The BIG Idea How much will it cost to buy, operate, and insure a car? AGENDA Approx. 45 minutes I. Warm Up (5 minutes) II. What Can You Spend? (15 minutes) III. Getting
2 Bank of North Dakota College Planning Center It s hard to believe that the way you save and spend money as a high school student sets the stage for your future. If you develop good habits now, you are
Knee Deep in Debt Having trouble paying your bills? Getting dunning notices from creditors? Are your accounts being turned over to debt collectors? Are you worried about losing your home or your car? You're
About Credit Financial Literacy What is Credit? Credit is the ability to borrow money with a promise of future payment. Why borrow? Goals - car, appliances, furniture, etc Home Education Health Plan your
Understanding Vehicle Financing Understanding Vehicle Financing With prices averaging more than $31,000 for a new vehicle and $17,000 for a used model from a dealership, you might consider financing or
Lesson 2: Savings and Financial Institution Knowledge Making the Most of Your Money All the materials and information included in this presentation is provided for educational and illustrative purposes
Credit and Debt What is Credit? Credit is a contract between a lender, such as a bank, a credit card company, or a store, and an individual or company. The lender provides the money or access to money,
PNC Financial Education FINANCIAL OPS Banking Solutions for Military Personnel Credit: Self study Guide Revision Date: 11/2012 PNC Financial Education:FINANCIAL OPS Understanding Credit We all have financial
debt Managing debt Easy to get into, harder to get out Inside... Think before you borrow Know your options Make a debt repayment plan Think before you borrow Borrowing money is called getting into debt.
1-888-842-6328 For toll-free numbers when overseas, visit Collect internationally 1-703-255-8837 TDD for hearing impaired 1-888-869-5863 Credit Wise Credit: a Useful Tool Most of us use consumer credit
Credit Cards 2 Money Matters The BIG Idea What are the risks of choosing and using credit cards? AGENDA Approx. 45 minutes I. Warm Up: A Credit Card You Can t Pass Up? (10 minutes) II. Credit Card Advantages
After Bankruptcy: What You Need to Know The Path to Creditworthiness Bankruptcy offers some resolution to your financial worries. However, it also carries negative consequences and major responsibilities
Presentation Slides $ Lesson Seven Credit 04/09 advantages and disadvantages of using credit advantages: Able to buy needed items now Don t have to carry cash Creates a record of purchases More convenient
Unit 4 - Good Debt, Bad Debt: Using Credit Wisely Credit Facts Nearly 33% of teens owe money to either a person or company, with an average debt of $230. About 26% of teens ages 16-18 already have more
NORTH DAKOTA PERSONAL FINANCE EDUCATION Good Debt, Bad Debt: Using Credit Wisely Leader Guide Learner Objectives Students will: Understand the different types of credit Learn how to use credit as a tool
Understanding Credit Megan Stearns, Credit Counselor Obtaining your free credit report will lower your credit score. Closing old accounts can help your credit score. Paying off the balances on your credit
When Finances Go Wrong - Debt Very few people now have no debt at all after all a mobile phone contract, or your rent/mortgage are both debts. It becomes an issue for people when they cannot meet the payments
Federal loans: The smart way to borrow If you don t receive enough free money to pay for college and you aren t able to cover your costs with savings or other resources, consider federal student loans.
Chapter Objectives Chapter 6. Short Term Credit Management To evaluate reasons for and against using credit and decide whether or not credit is appropriate for you. To be able to take the necessary steps
Lesson 13 Take Control of Debt: Become a Savvy Borrower Lesson Description After reviewing the difference between term loans and revolving credit, students analyze a fictitious character s use of credit
STUDENT MODULE 7.1 BORROWING MONEY PAGE 1 Standard 7: The student will identify the procedures and analyze the responsibilities of borrowing money. Remember the Interest Mom, it is not fair. If Bill can
Loan to Own Building: Knowledge, Security, Confidence FDIC Financial Education Curriculum TABLE OF CONTENTS Page Module Overview 1 Purpose 1 Objectives 1 Time 1 Materials and Equipment Needed to Present
Chapter 06 Introduction to Consumer Credit McGraw-Hill/Irwin Copyright 2012 by The McGraw-Hill Companies, Inc. All rights reserved. 6-1 Chapter 6 Learning Objectives 1. Define consumer credit and analyze
CHAPTER 6 Introduction to Consumer Credit Personal Finance 7e Kapoor Dlabay Hughes 6-1 Use and Misuse of Credit Before you use credit for a major purchase, ask yourself some questions. Do I have the cash
2.4.1.L1 Note taking guide Take Charge of Credit Cards Note Taking Guide Total Points Earned Total Points Possible Percentage What is credit? A credit card is a form of credit! What is interest? What is
Improve Your Credit Put Bad Credit Behind You Improve your credit While it s possible to get by without credit, access to credit is essential for buying a home, financing a car or getting a credit card.
Activity 3.3 Analyzing a Credit-Card Statement TEACHER S GUIDE VIDEO SUMMARY AND ACTIVITY OVERVIEW Many people use credit cards wisely, finding them to be convenient and especially helpful in emergency
Building a CREDIT REPORT Federal Trade Commission consumer.ftc.gov Shopping for a car? Applying for a job? Looking for a home? Getting your financial house in order? It s time to check your credit report.
Lisa Croat and Andrea Clark Lunch provided by the Higher One Financial Literacy Counts Grant Overview Develop a plan Understand financial aid Be a responsible borrower Take charge of credit cards Understand
YOUR MONEY, YOUR GOALS A financial empowerment toolkit for Social Services programs Consumer Financial Protection Bureau April 2015 Table of contents MODULE 1: Introduction to the toolkit...1 An introduction
Table of Contents Checking In... 3 Pre-Test... 4 What Is Credit?... 6 Collateral... 6 Types of Loans... 7 Activity 1: Which Loan Is Best?... 8 The Cost of Credit... 9 Activity 2: Borrowing Money Responsibly...
Growing Dollars and $ense: Personal Financial Planning Seminar The Coalition for Debtor Education Kimberly Allman www.debtoreducati0n.org Email: firstname.lastname@example.org This program is made possible by a grant
DIY Credit Repair Contents 1 WHAT'S ON YOUR CREDIT REPORT?... 3 WHAT IS IT?... 3 HOW TO GET YOUR CREDIT REPORT... 5 WHAT'S ON YOUR REPORT?... 7 2 LOCATE THE CREDIT REPORT MISTAKES... 10 WHY ARE THERE MISTAKES?...
TEACHER GUIDE 7.2 BORROWING MONEY PAGE 1 Standard 7: The student will identify the procedures and analyze the responsibilities of borrowing money. It Is In Your Interest Priority Academic Student Skills
1 Lesson 7: About Credit Why Get Credit? To establish a credit history. Advantages and Disadvantages of Using Credit 1. Advantages Able to buy needed items now. Don t have to carry cash. Creates a record
A HOME FOR YOUR FAMILY 7 Budgeting for Home Ownership Perhaps you are just beginning to think about buying a home sometime in the future. Or maybe you have already found a home you would like to buy. Whether
Understanding Credit Topics covered: Establishing Credit Credit Scores Repairing Credit Why is credit necessary? Applying for a loan Applying for a credit card Applying for a mortgage Renting an apartment/house
YOUR MONEY, YOUR GOALS A financial empowerment toolkit for community volunteers Consumer Financial Protection Bureau April 2015 Table of contents INTRODUCTION PART 1: Volunteers and financial empowerment...
UNDERSTANDING YOUR CREDIT CARD STATEMENT Consolidated Credit 5701 West Sunrise Boulevard Fort Lauderdale, FL 33313 1-800-210-3481 www.consolidatedcredit.org Congratulations on taking this important step
Charge It Right Building: Knowledge, Security, Confidence FDIC Financial Education Curriculum TABLE OF CONTENTS Page Credit Cards and Debit Cards 1 Other Cards 2 Sample Truth in Lending Disclosure Statement
Quick Response Explain how you think credit cards work. How much do you have to pay every month? What happens if you pay late? What kinds of fees are involved? Unit 4 - Good Debt, Bad Debt: Using Credit
8) Credit Buying with credit lets you purchase something and use it while you are still paying for it. There are two common types of credit: Credit Cards Offered by credit card companies, department stores
Account a service provided by a bank allowing a customer s money to be handled and tracks money coming in and going out of the account. Account fee the amount charged by a financial institution for the
Dimes to Riches Money Management for Teens in Grades 7-12 s e e r t n o row g t n s e o yd e n o M t a! h k t n a w b o n a k t u n By now yo Your parents are & Life is getting busy and you need cash for
Credit Matters Be a Smart Credit Consumer ICAN Iowa College Access Network Iowa College Access Network ICAN Iowa College Access Network The Iowa College Access Network (ICAN) helps individuals attain their
FINANCING 101234 567890 123456 FINANCING 101 With a typical Hyundai Finance lease, you re covered for normal wear and use without having to pay additional charges at the end of the term. And while it s
lesson seven about credit overheads advantages and disadvantages of using credit advantages: Able to buy needed items now Don t have to carry cash Creates a record of purchases More convenient than writing
the Problem In most games, it is wise to understand the rules before you begin to play. What if you weren t aware that you were playing a game? What if you had not choice whether to play or not? Everyone
Choosing the Right Credit Card for You Credit Cards and You series About FCAC With educational materials and interactive tools, FCAC provides objective information about financial products and services
Financial Series June 2011 Being a Guarantor in Alberta Has someone you know asked you to be a Guarantor? Are you already a Guarantor and worried about what comes next, or what is already occurring? This
Your consent to our cookies if you continue to use this website.