Credit

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					                                  Credit
1. What is credit?




2. Why is it important to have good credit history?




3. What is a negative effect of having bad credit?




4. What is the difference between interest when saving money and interest
   when borrowing money?




5. What charges may you encounter by having a credit card?




6. You charge $298.95 on a credit card. The card has an annual percentage
   rate (APR) of 18%. Use the credit calculator to determine (1) how long it will
   take to repay your debt if you make monthly payments of $6>75 and (2) the
   total amount of interest you will pay.

   1.

   2.
7. What do you need to think about before you make a purchase on credit?




8. Angie is buying a CD player for $199 plus 6.5% tax. She decides to pay for it
   in 2 equal installments on her credit card over 2 months. If the interest on
   the credit card is 18% APR how much interest will Angie Pay?




9. What is the real cost of the CD player? Remember, it costs $211.94 and the
   total interest charge will be $5.00.




10. Uh-oh, Angie neglected to make her payment on time. As a result, the bank
   charged her a $20 late fee. Therefore, the total amount Angie ended up
   paying the bank was $238. Had she paid cash, the CD player would have cost
   her $211.94. How much did using a credit card cost her?




11. Why would a loan be better to use on a big ticket item rather than a credit
   card?



12. What do you now know about the benefits and drawbacks of having a credit
   card?

				
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