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					Online Version for Program
 Course Credit 2010-11


            Financial Literacy
             Education III:
         Credit and Credit Cards

                         Fall 2010
 Goals for This Meeting

 Budgeting
 Credit Basics
          Credit Scores
          Credit Reports
          Credit Cards
          Credit Problems




Page 2
 Group Agreements
 Commitment to Glow Foundation’s program
 Be prompt and prepared for all Glow sessions
  (including HW items)
 Reach out for help when needed
 Respond promptly to emails or phone calls
 Share the information learned with family and peers
 Be respectful (one mic)/confidentiality
 Accountable for myself and the group success


Page 3
   Credit Terminology
__ Annual Fee          a) A company that gathers information on
                       consumers who use credit.

__ Annual Percentage   b) A document issued by an independent credit
    Rate (APR)         agency that contains information concerning a loan
                       applicant’s credit history and current credit
                       standing.

__ Credit Bureau       c) An amount a credit card company charges a
                       credit card holder to use the card for a year.

__ Credit Report       d) A rating system that indicates a person’s
                       creditworthiness based on a number of criteria.

__ Credit Score        e) The total amount of money borrowed not
                       including interest or service charges.

__ Principal           f) A rate used to compare different loans
                       which takes into account the loan’s interest rate,
                       term, and fees.
  Page 4
Credit Defined


FIRST, let’s come up with a group definition for
  credit:




Page 5
Credit
   How can you start to build good credit?
          What are signs of bad credit?
         Good Credit Signs                 Bad Credit Signs

Paying at least the minimum        Paying less than the minimum
balance                            balance
Paying on time                     Paying late

Making all payments                Missing payments

Staying within your credit limit   Exceeding your credit limit


     Establishing credit is important for borrowing money
     later. No credit is not the same as good credit!

Page 6
 How Credit Impacts You
Establishing good credit history is important!
  Credit can affect various aspects of your life:

 Lenders: Determine whether you can get a loan and the loan
  terms (good credit = better interest rate)

 Insurance Companies: Determine if you can get insurance and
  the rates you pay

 Employers: Can affect you ability to get a job

 Landlords: Determines whether you can rent an apartment

 Telephone and other utility companies can use this to
  determine whether to provide services to you.

Page 7
Credit Score

    Credit Score: A number between 300-900 that
      indicates your creditworthiness.

    •    The higher the number, the stronger your score.

    •    Points are earned based on factors like your payment
         history, the length of your credit history, and
         account balances.




Page 8
 Credit Report
                What is a credit report?
A document issued by an independent credit agency that contains
information concerning a loan applicant’s credit history and
current credit standing.


Review your credit report:
1.Annually
2.Before making a big purchase


People/Companies Review Your Credit Report When You:
1.Complete a credit card application
2.Complete a rental application
3.Apply for a loan


Page 9
 Credit Cards vs. Debit Cards
Credit cards allow you to purchase something TODAY and pay
it off over time.

          Credit cards are NOT the same as debit cards

                       Credit Cards                 Debit Cards
Payment                  Pay Later                    Pay NOW
Interest         Interest is charged on the              No
Charges              remaining balance
  Pros          Potential to build your credit   Prevent major debt
               history and get freebies/points
  Cons            Additional fees; risk of       Fees if you overdraw
               overspending and hurting your
                      credit history
Page 10
     Before Getting a Credit Card…
SHOP AROUND!! Know:

1.   Are there annual fees or other regular charges?

2. What is the credit limit?

3. What is the interest rate? Is it fixed or variable?

4. What is the Annual Percentage Rate or APR (Measurement
   that takes into account the interest rate, term, and fees)

5. Are there benefits to getting this card (points, freebies,
   etc)?

Page 11
  Paying Your Credit Card
Original    APR       Monthly    Number of    Term      Total
Balance              Payments     Monthly    (Years)   Amount
                                 Payments               Paid

 $1000      18%       Minimum       87         7       $1,516


 $1000      18%      Minimum +      26         2       $1,187
                        $25

 $1000      18%      Minimum +      16          1      $1,119
                        $50


TAKEAWAY: Pay as much of the balance as possible to reduce
the term and amount of interest paid. Whenever possible, pay
                    off your bill in full!

 Page 12
Tips for Managing Your Credit Card

 1. Use cash or debit cards for daily expenses
 2. Know how you are going to pay for your credit card
    purchases before you start spending
 3. Get a card with low interest and pay as much of the
    balance as possible
 4. Pay on time
 5. Don’t spend more than you have. Stay within your
    budget.
 6. Don’t exceed your credit limit
 7. Others?




Page 13
 Recap

 Budgeting
 Credit Basics
           Credit Scores
           Credit Reports
           Credit Cards
           Credit Problems




Page 14

				
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