Preventing the Credit Card Blues at 22
Brought to you by
Cooperative Extension
Presented by…
(Your Name) , Extension Educator UN-L Cooperative Extension (?) County Courthouse (City) , Nebraska
Plastic?
Debit vs.Credit
$$$$$$ AVAILABLE TO USE
WITH A
PROMISE
TO PAY BACK
Kinsley’s…
Wants vs. Needs
Pressures?
Incentives?
Lynn’s Shopping For a Credit Card
APR
or
Annual Percentage Rate
Lynn’s Shopping For a Credit Card
APR Name of Card Acme Credit Bandwagon Credit Catch-All Credit Intro 4.7%* Reg. 12.99%
* CAUTION:
The advertised introductory rate applies only to cash advance checks and balance transfers.
0%* None 0%
15.99% 18.99% 9.99%
Day-to-Day Credit
Everything Credit
0%
14.99%
Introductory Interest Rates
generally expire after 3 to 6 months
Additional considerations when choosing a credit card…
Credit line Other fees
annual fee finance charge over limit charge
Incentives
Shop around…
To get the best credit card for your needs examine the interest rate year around does it have an an appropriate credit line does the credit card have an annual fee
What constitutes late?
Bill has to make it to payment center by due date… And possibly by a specified time… 2:00 p.m. CDT? EDT? Legal holidays Tip: if mailing payment allow 7-10 days
Penalties for being late…
Late fee
average $19 to $29
Name of Card Acme Credit Bandwagon Credit Catch-All Credit Day-to-Day Credit Everything Credit Intro 4.7%* 0%* None 0% 0% APR Reg. 12.99% 15.99% 18.99% 9.99% 14.99% Fee $29 $19 $29 $19 $19 19.99% 21.15% Late APR 12.99% 15.99%
Lose introductory interest rate –
jump to regular rate or jump to an even higher APR than regular rate
Cash advances
Contract says fee for cash advance is 3% of the amount charged…or 30¢ but The credit card company charges a minimum fee of $5.00 Interest rate often higher Interest begins accumulating immediately
Jayne’s Monthly Bill
APR
Name of Card
Late Reg. Fee $29 APR 12.99%
Cash Advance Fee 3%
(min. $5
Intro 4.7%*
APR 12.99%
Acme Credit Bandwagon Credit Catch All Credit Day-to-Day Credit Everything Credit
12.99%
0%* None
0% 0%
15.99% 18.99%
9.99% 14.99%
$19 $29
$19 $19
15.99%
3%
(min. $5)
15.99% 21.99%
19.99% 14.99%
3%
(min. $5)
19.99% 21.15%
3%
(min. $5)
3%
(min. $5)
*The advertised introductory rate applies only to cash advance checks and balance transfers.
What Jayne Expected…
Tires $129.00 Minimum Payment - 50.00 Balance remaining 79.00 Interest on balance due .00 (at Introductory 0% APR) Pizza 15.00 Cash Advance 10.00 November Balance Due $104.00
What Jayne Really Got!!!
Balance carried from October over $ 79.00 October Late Fee 19.00 Interest on tires @ Penalty Rate 1.70 (15.99% APR) Sub-total $99.70
Plus…Jayne’s New Charges
Pizza Cash Advance Cash Advance Fee Cash Advance Interest 15.99% based on 13 days $ 15.00 10.00 5.00 1.40
November Balance Due $131.10
Lee “maxes out”
CREDIT REALITY CHECK
Year
Payment Number Years of Payment Minimum Payment Due Interest Paid Principal Paid Balance Due Total Interest Paid to Date Total Principal Paid to Date
1 1 0 $50.00 $41.25 $8.75
15 180 15 $26.69 $22.02 $4.67
25 300 25 $17.53 $14.46 $3.07 $873.23
30 360 30 $14.21 $11.72 $2.49 $707.57
45 540 45 $10.00 $3.52 $6.48 $207.03
47 566 47 $10.00 $.09 $9.91 $0.00
$2,491.25 $1,330.01 $41.25 $8.75
$5,515.67 $7,669.04 $8,450.03 $9,545.26 $9,983.63 $1,169.99 $1,626.77 $1,792.43 $2,292.97 $2,500.00 TOTAL PAID $12,483.63
How can you avoid getting in Lee’s predicament?
Limit credit card use to what you can pay off in total when the next bill arrives.
Why might Lee have not been able to pay the credit card off sooner?
Lifecycle changes
get married have children of your own buy a house and furnishings major car breakdown doctors’ bills for colds, broken bones and teenagers with”zits” economy declines…lose your job
Things happen
Is it your parents’ responsibility to pay your credit card debt?
NO…
However, if a parent co-signs the credit card application then the parent would be responsible.
My signature means that I agree to the terms and conditions on the reverse side of this form… Meaning…I agree to pay according to the credit card company’s terms…
fixed or variable APR on time w/ at least the minimum monthly payment
Legally Binding Contract
If you must have a credit card, experts recommend…
have only ONE!
Protecting Sam’s Credit and Identity
Protect all personal information: name, address, date of birth, Social Security #, mother’s maiden name, and account numbers Shred all bills, credit card applications, junk mail, etc. Never give out personal information over the phone
It’s not a mystery for Morgan…
ATM safety
Be alert for anything suspicious Be share ATM is well-lighted Avoid ATMs with obscuring bushes Take a companion along at night Never accept offers for assistance Leave plenty of space between you and the person in front of you NEVER stand around and count your money!
Laura loses it…
Call the card issuer immediately Report the loss/theft to authorities…including campus police if in college Call the three national credit reporting organizations and place a “fraud alert” Check monthly statements carefully
Remember establishing a good credit history means handling credit wisely…
Having a credit card is not what establishes a good credit history…
It’s establishing a good record of re-paying your debts that really matters.
Cooperative Extension
2002 University of Nebraska Institute of Agriculture and Natural Resources