Cost of Credit
Natasha Gill, Teacher
Describe the responsibilities of consumer
Explain why credit costs vary.
Understand and compute simple interest.
Explain how to compute the APR on
Compare methods of computing finance
charges on revolving credit.
Describe how credit costs can be reduced or
The Cost of Credit
Consumer responsibilities when using credit:
Creditor’s responsibilities to users of credit
Strategies to prevent credit card fraud
Why credit costs vary:
Source of credit
Type of credit
Costs other than finance charges
How to compute the cost of credit:
Finance charge on credit card purchases
How to avoid unnecessary credit costs
Use credit wisely
Have the right attitude
Limit spending to what you can pay
Read and understand agreements
Contact the creditor when there’s a
Preventing Credit Card Fraud
Carry only the cards you need.
Keep a list of credit cards and their
numbers in a safe place.
Notify creditors immediately when a
card is lost or stolen.
Keep a copy of all sales receipts;
compare to bill when received.
Notify a creditor immediately – in writing
– if a discrepancy appears.
Put cards back in your wallet after
completing a purchase.
Sign newly issued cards immediately.
Destroy (cut) expired cards.
Don’t give credit card numbers and expiration
dates (by phone) to people or businesses you
Don’t allow sales clerks to write credit card
numbers and expiration dates on checks.
Destroy carbons, old credit slips, statements,
canceled checks, and other sources of data.
Don’t allow clerks to make a second
imprint – keep your credit card in view
at all times.
Don’t write your address, phone
number, or other data on charge slips.
Accept only the amount of credit that
Keep credit spending steady when
income increases (save or invest the
Keep credit cards to a minimum. Only
carry what you use.
Pay cash for small purchases.
Understand the cost of credit.
Shop for loans.
Use credit to beat inflation (to avoid
Use credit to your advantage; the cash
not spent on purchases can be
Time purchases carefully – know your
Use service credit wisely.
Take advantage of rebate programs.