Preventing Credit Card Blues at 22

Preventing Credit Card Blues at 22 Preventing Credit Card Blues at 22 Developed by: Debra Schroeder, M.S. Rebecca Versch, M.S. Carroll Welte, M.S. Cooperative Extension Extension Educators Credit: To Use or Not to Use     Credit Cards Competition for credit card customers has become very intense You are a prime target Goals    Help you develop knowledge and skills to make wise decisions Manage credit wisely Protect your identity Preventing Credit Card Blues at 22     Develop an understanding of the implications, responsibilities and risks of using (a) credit card(s) Develop decision making skills related to credit card use Minimize the risk of unmanageable credit card debt Develop budgets and spending plans you can follow Credit Card Blues at 22?   Scenario Do you think filling out a credit card application is the right thing for Kinsley to do? Students and Credit Cards  Dr. Robert Manning, the author of Consumer Federation of America(CFA) study on students and credit cards says, ―The unrestricted marketing of credit cards on college campuses is so aggressive that it now poses a greater threat than alcohol or sexually transmitted diseases.‖ Credit Card Blues at 22 Group Discussions of Scenarios  Credit Card Offer Comparison   After carefully studying the credit card applications which offer do you feel is best and why? Please share, with the class, any cautions and/or concerns that you learned by studying the credit card offers. Credit Card Versus Debit Card    What advantages will Morgan have with a debit card? How is a debit card different from a credit card? What precautions should Morgan practice when using an ATM? Credit Card Versus Debit Card  Credit Card      Convenience of paying without additional interest charges No need to carry check book No additional identification needed No need to carry cash Credit available to cover emergency needs Credit Card Versus Debit Card  Debit Cards     Transactions come directly out of your checking account Provide access to own money Limit amount you spend Requires PIN number ATM Safety and Security Tips       Be alert for anything suspicious Be share ATM is well lit 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     If someone is too close ask them to move. If not comfortable close transaction and leave Select different PIN Memorize PIN Check account statements carefully each month ATM Safety and Security Tips     When transaction is complete take card, receipt, money and put them in your pocket. Don’t count money at the ATM ATM robberies occur after the transaction Missing cards should be reported to issuer immediately Credit Card Use Reality       Was buying tires an emergency which justified the use of her credit card? Is buying pizza an emergency? Why did the credit card company charge a late fee when she mailed her payment on October 10th? What will the APR be now that she has been late with her payment? What was the charge for getting a cash advance? What can Jayne do to avoid problems in the future? What Jayne Expected…       Tires Minimum Payment (October) Balance Remaining Pizza Cash Advance Interest on balance due (at Introductory 0% APR) $129.00 –50.00 79.00 15.00 10.00 0.00  November Balance Due $104.00 What Jayne Really Got!!       Tires Minimum Payment Balance Remaining (October) October Late Fee Interest on Tires @ Penalty Rate (15.99%) Sub-total $129.00 --50.00 79.00 19.00 1.70 99.70 Plus…Jayne’s New Charges Pizza 15.00  Cash Advance 10.00  Cash Advance Fee 5.00  Cash Advance Interest---15.99% 1.40 30 days on October Balance and 13 days on Cash Advance November Balance Due $131.10  Protecting Sam’s Credit & Identity  What steps would you suggest to Sam to protect his credit and identity? Protecting Sam’s Credit & Identity      All sign lease Written agreement on bill payment Written rules of responsibilities Filing system for group bills File all personal bills and information    Protect all personal information: name, address, date of birth, Social Security number, mother’s maiden name, and account numbers Shred all bills, credit card applications, junk mail and etc. Never give information over the phone Credit Reality Check        How long will it take Lee to pay off his $2,500 balance? How long will it take to reduce the balance to half? What is the final amount that Lee will pay to settle this bill? How much total interest will Lee pay? When will the monthly payment go more to principal than interest? At his 25th reunion how much will he still owe on this bill? What could have Lee done differently? Reporting a Missing Credit Card  What steps should Laura take now that her student identification and credit card are missing? What suggestions would you give Laura for handling missing credit cards when she first realizes they are missing? Reporting a Missing Credit Card       Immediately notify company May have to send information in writing Contact law enforcement Contact national credit reporting agencies Social Security number Student ID Credit Card Abuse Puts You at Risk What could be more important than your GPA or job performance record? Your Credit Report A negative report can—       Make it harder to rent an apartment Make it harder to buy a house or car Hinder you from obtaining your dream job Credit Card Abuse Puts You at Risk  Handle credit responsibly, especially credit cards! Preventing Credit Card Blues at 22 Cooperative Extension  2002  University of Nebraska  NU Institute of Agriculture and Natural Resources