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					Financial Planning - Section 2

      Using Credit Cards:
 The Role of Open Credit / Part II
            Mr. Yates
           Your Rights With the Credit Bureau

          70% of Americans have at least one negative
          remark on their credit report and almost 50% of
          reports contain incorrect or obsolete information.
          Review your report and report inaccuracies for
          investigation.
          If applicable, add a statement.




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           If Your Application is Rejected

                            Apply for a card with
                            another institution.

                            Find out WHY you were
                            rejected. Then, take steps
                            to correct the problem.




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           Resolving Billing Errors

          Fair Credit Billing Act
          of 1975
          You may withhold
          payment for a disputed
          charge.
          You must notify the card
          issuer within 60 days of
          the statement date if
          there is a problem.


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           Resolving Billing Errors (cont’d)

          Send a description, including amount in dispute, to
          the billing inquiry address.
          You should receive notice from the card issuer
          that an investigation is underway within 30 days.
          The card issuer has 90 days or two billing cycles
          to resolve the dispute.
          You may appeal any unfavorable outcome.



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           Resolving Billing Errors (cont’d)

          You may sue the card issuer in small claims court.



     Note: During any appeal, the card issuer has the
      right to report your account as delinquent. This
      could have an adverse effect on your credit rating.




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           Consumer Credit Laws

          Truth in Lending Act of
          1968

          Truth in Lending Act
          (amended 1971)

          Truth in Lending Act
          (amended 1982)

          Fair Credit Billing Act
          of 1975
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           Consumer Credit Laws (cont’d)

          Equal Credit
          Opportunity Act of 1975

          Equal Credit
          Opportunity Act
          (amended 1977)

          Fair Debt Collection
          Practices Act of 1978
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           Consumer Credit Laws (cont’d)

          Fair Credit Reporting
          Act of 1971

          Fair Credit Reporting
          Reform Act of 1996




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           Managing Your Credit Cards and Open
           Credit

          Reducing your balance
          Protecting against fraud
          Trouble signs in credit card spending
          Controlling spending
          If you can’t pay your credit card bills




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           Reducing Your Balance

                             Pay more than the 2%
                             to 3% minimum
                             monthly payment

                             Find a card that offers
                             a lower interest rate




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           Protecting Against Fraud

          Save your credit card receipts.
          Compare them to your statement.
          Destroy old receipts.
          Use caution when giving out your credit card
          number, even though your liability for fraudulent
          use is limited to $50.
          Never leave a store without your card.



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           Trouble Signs in Credit Card Spending

                               Complete the
                               Checklist 6.2 “Credit
                               Card Habits Quiz”

                               Evaluate your credit
                               card usage




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           Controlling Your Credit Card Spending

          Set goals.
          Develop a budget.
          Track your credit spending.
          Record all credit purchases in a ledger.




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           What to Do If You Can’t Pay Your
           Credit Card Bills

          “Act your wage!!”
          Make sure you have the least expensive credit
          card.
          Consider using savings, if possible, to pay off
          debts.
          Consolidate your debts with a home equity loan or
          secured personal loan.



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           Summary

          Two types of open credit:
               Revolving credit lines and credit cards, including bank,
                T&E, and single purpose cards
          Factors that determine the cost of credit:
               Interest rate
               Balance calculation method
               Grace period
               Annual fees
               Other fees

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           Summary (cont’d)

          Advantages of using             Disadvantages of
          open credit:                    using open credit:
               Source of interest-free      Easy to lose control of
                credit                        spending
               Making reservations          An expensive way to
               Use as identification         borrow money
               Source of free benefits      You’ll have less
                                              spendable income in
                                              the future


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           Summary (cont’d)

          The “five C’s” of creditworthiness:
               Character, capacity, capital, collateral, and conditions
          National credit reporting bureaus:
               Experian, Equifax, and Trans Union
          Methods of calculating finance charges:
               Average daily balance, previous balance, and adjusted
                balance




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           Summary (cont’d)

          Monitor credit report information
          Control credit spending
          Recognize and avoid credit trouble
          Understand credit consumer protection laws




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