Credit Cards. Megan Stearns, Credit Counselor

Transcription

1 Credit Cards Megan Stearns, Credit Counselor

2 Agenda What is a credit card? Types of credit cards Shopping for a credit card Advantages and disadvantages Using credit cards wisely Fraud

3 What is a credit card? A credit card is a loan No set time to be paid back There s a pre-determined credit limit Money spent can be paid back in full or in installments Anything not paid back in full is assessed a finance charge

4 What is a credit card? Loan A credit card has an interest rate Fixed Rate can still change, as long as the credit card issuer notifies you Variable

5 What is a credit card? No set time to pay back Revolving line of credit Payment options Pay off in full each month Make minimum payment each month You will be assessed a finance charge

6 What is a credit card? Credit limit The maximum amount of money you can spend May be fees or interest rate increases for going over your credit limit

7 Types of Credit Cards Bank card Store card Secured card Charge card

8 Types of Credit Cards Bank card Can be used anywhere Backed by Visa, MasterCard, American Express, Discover, etc. Typically have better interest rates Usually have a rewards program based on cash back, points or miles

9 Types of Credit Cards Store card Can only be used at a specific store Unique rewards program Discounts at the store Special coupons Easier to obtain Usually have higher interest rates

10 Types of Credit Cards Secured card Card is secured by your money Usually has a lower limit Usually has a higher interest rate Good option for individuals with no credit or bad credits

11 Types of Credit Cards Charge card No preset spending limit Balance must be paid in full at the end of the month Usually an American Express card

12 Shopping for a Credit Card Type of card Fee schedule Grace period Annual Percentage Rate (APR) Finance charge Credit limit Monthly payment Rewards programs and cardholder benefits

13 Shopping for a Credit Card Fee schedule Annual fee Late payment fee Over limit fee Cash advance transaction fee Balance transfer fee

14 Shopping for a Credit Card Grace period Time before interest is charged Typically days Not offered when there is an unpaid balance on the card Not offered on cash advances or balance transfers

15 Shopping for a Credit Card Annual Percentage Rate (APR) Yearly rate of interest Must be disclosed to borrower Finance charge Monthly charge for carrying a balance on a credit card Added to card balance

16 Shopping for a Credit Card Rewards programs and cardholder benefits Extended warranties Price matching Coverage for damaged or stolen products Rental car insurance Cell phone replacement Travel insurance No baggage fees Free admission Free currency conversion

17 Shopping for a Credit Card Purdue Federal Rewards Visa Cardholder Benefits Travel Benefits Travel accident insurance Concierge service Travel & emergency assistance Auto rental collision damage waiver Warranty manager service Cell phone protection

18 Shopping for a Credit Card Purdue Federal Rewards Visa Cardholder Benefits Other Protection Auto rental collision damage waiver Warranty manager service Cell phone protection Fraud resources Visa checkout Zero liability Shopping discounts

19 Shopping for a Credit Card

20 Credit Card Advantages Convenient Immediate: Use of item now No need for cash Zero liability on fraud Spending record Rewards program

21 Credit Card Disadvantages Can be easy to overspend May include additional fees Interest rate (APR) may go up Can be lost or stolen risk of fraud Credit history damaged if misused

22 Using Credit Cards Wisely Keep track of your spending Save receipts Pay your bill on time Avoid late fees Pay in full every month Avoid charging more than you can pay off at the end of the billing cycle Don t exceed the credit limit

23 Using Credit Cards Wisely If you can t pay cash for something you shouldn t be putting it on a credit card Purchase items you would normally buy anyway Gas, groceries Use as a convenience tool, not a loan Don t use a credit card as an emergency fund

24 Using Credit Cards Wisely Credit card balance : $1,000 Interest rate: 24.99% Minimum monthly payment: $25.00 Total finance charge: $1, Number of payments: 87 months OR 7.25 years

25 Using Credit Cards Wisely Interest rates matter! Credit card balance: $1,000 Minimum monthly payment: $25.00 Interest Rate Total Interest Paid Months to Pay Off Credit Card A 9.5 % $ Credit Card B 15.5 % $ Credit Card C 17.5 % $

26 Protect Yourself from Fraud Never leave receipts lying around Shred old receipts, bills and unwanted card offers Protect your credit history Review your credit report annualcreditreport.com Review statements carefully Immediately report any discrepancies or errors on the monthly statement

27 Protect Yourself from Fraud Report a lost or stolen card immediately Protect personal information You should never give out your credit card number unless making a telephone, mail order, or online purchase Do not let anyone else use your credit card and do not charge purchases for other people

28 Questions?

29 Megan Stearns Phone: Website: PURDUEFED.COM Student Blog: PURDUEFED.COM/STUDENTS