AVID Standard 1.2 Plan for ongoing personal and academic development
• The median credit card debt is about
• This means 50% of Americans have less
than $2,000 in credit card debt and the
other 50% of Americans have more than
$2,000 in credit card debt.
Average American Income
• Less than 9th grade education: $20,000
• High school graduate: $32,000
• Bachelor’s Degree: $57,000
• Professional Degree: $120,00
College Students & Credit
• The average age at which a U.S. consumer
gets their first credit card is 21
• 84% of college students have credit cards
• The average undergraduate student has
$2,200 in credit card debt
• The average college graduate has $4,100 in
credit card debt
• The average college graduate has nearly
$20,000 in debt
• 84% of undergraduates indicated they
needed more education on financial
management topics. In fact, 64%would
have liked to receive information in high
(Source: Sallie Mae, "How Undergraduate Students Use Credit Cards," April 2009)
• The average interest rate is about
16.75% A.P.R. (Annual Percentage Rate)
• As of 2008, the average number of credit
cards Americans have is 3.5
How Long Would It Take?
• Pretend you owe $9,000 to your credit
• If the interest on your credit card is 18%
• The minimum payment is $135 per
• How long would it take to pay off the
$9,000 debt and finance charges?
How Long Would It Take?
• Trick question! You will NEVER pay off
the $9,000 debt paying the minimum
payment of $135 per month.
• Do the math: $9,000 x .18 = $1,620
• $1,620 divided by 12 = $135 per month
The Cost of Time
• Let’s say you owe $3,000 on a credit
card with a 15% interest rate
• If you make the minimum payment of
$75, it would take Over 4 ½ years to pay
off your credit card!
• The FICO score is one such popular
scoring method. Its scale runs from 300 to
• The vast majority of people will have
scores between 600 and 800.
• A score of 720 or higher will get you the
most favorable interest rates on a
Breakdown of Credit Scores
What Makes Up Your Credit
Read Your Statement
• Look for errors. Write your credit card
• Has your rate been increased?
• Check your balance. Know what you
Credit Card Tips
•Pay on time. Late payments negatively
affect your credit score. There may be
fees for late payments.
• Avoid cards with annual fees.
Credit Card Tips
• Ask yourself, “Do I really need this?”
• Make more than the minimum payment
• Avoid reaching the credit card limit.
Keep a portion of your credit limit for
• Late fees may also put you over your
credit limit and raise your rates
Ignore the Free Checks
• They aren’t free.
• They are almost the same as a cash
• Interest accumulates immediately
Say No to Skip Payments
• Usually occur before or after holidays
• Interest is still being added to your
Reject Offers to Increase Your
• Increasing your credit line is like having
a whole cake in front of you to eat instead
of a small piece.
Small Credit Line Large Credit Line
Stop Using Credit
• Paying off your balance is difficult if you
keep adding to it.
• Use your debit card or cash instead
Reduce the Interest Rate
• If you have a long history with the credit
card company and have made payments
on time, call and ask for a rate reduction
Transfer Your Balance
• Transfer your balance to a credit card
with a lower interest rate*.
• *be careful about introductory rates
Credit Cards Rules of Thumb
• Never borrow more than 20% of your
annual net income (after taxes)
• For example, if your annual net
income is $9,600, you should not have
a debt load more than $1,920
• Your monthly debt payments should
never be more than 10% of your monthly
Credit Cards Can Be Good
•Establishes credit history
- Helpful in the future when you go
to buy a house or a car
• Some credit cards give you cash back
• You can borrow money for free if it is
paid back in full in 30 days!
Credit Cards Safety Tips
• Don’t let anyone use your card
• Instead of signing the back of the card,
write “Check I.D.”
• Check your credit scores at least once a
year to check for errors. It is free (once a
Request Copies of Your Credit