2/26/14“Credit card repayment” - #7 on HW

1. What is the total amount Leslie will pay for her $13,000 hospital visit if she makes only the required minimum payments?

2. How long will it take her to pay it off?

3. How could Leslie avoid paying any interest on her hospital visit?

4. Check TOTAL AMOUNT answers from yesterday:

(1) 890 + 264 = $1,154(2) 2600 + 847 = $3,447(3) 112 + 12 = $124 (4) 1500 + 322 = $1,822

(5) 156 + 14 = $170 (6) 250 + 20 = $270 (8) 456 + 59 = $515

Leslie’s $13,000 hospital visit:

Minimum Payment:

Interest:

Payoff time:

Total cost =

Leslie’s $13,000 hospital visit:

Minimum Payment: $55 per month

Interest:

Payoff time:

Total cost =

Leslie’s $13,000 hospital visit:

Minimum Payment: $55 per month

Interest: $8,724

Payoff time:

Total cost =

Leslie’s $13,000 hospital visit:

Minimum Payment: $55 per month

Interest: $8,724

Payoff time: 156 payments = 13 years

Total cost =

Leslie’s $13,000 hospital visit:

Minimum Payment: $55 per month

Interest: $8,724

Payoff time: 156 payments = 13 years

Total cost = $21,724

Leslie’s $13,000 hospital visit:

Minimum Payment: $55 per month

Interest: $8,724

Payoff time: 156 payments = 13 years

Total cost = $21,724…How could she avoid this?

2/26/14Econ. Agenda

1. What is a credit score? (class notes)

2. Understanding your credit score worksheet

HW: Finish “Understanding Your Credit Score” wksht.

2/26/14 Class notes – credit scores

delinquency:missing a payment due on your loan

installment loan:you borrow one sum of money and pay a set amount/percentage back per month (mortgages, car loans, college loans, etc.)

revolving credit:credit is automatically renewed as debts are paid off (credit cards, etc.)

2/26/14 Class notes – credit scores

What is a credit score?

• Number that “measures” your financial stability & ability to pay back loans

• Determines interest rates you get from banks, lenders, credit cards, etc.

• Also credit limits on credit cards

• Scores range from 300 – 850• Average American score is 650 – 740

2/26/14 Class Notes – credit scores

• Good Score = you’re trustworthy• Lower interest rates, APR, fees, etc.• Approved for loans (house, car, etc.)• Higher credit limits on credit cards

• Bad Score = you’re irresponsible• Higher interest rates, APR, fees, etc.• Lower credit limits• Denied loans (house, car, etc.)

2/26/14

Who determines your credit score?

FICO: Fair, Isaac, & Company

FICO credit score: • Collection of 3 credit reports from the 3 major

credit reporting companies1. TransUnion2. Experian3. Equifax

• 90% of all companies that look at credit scores use your FICO score

FICO score

What determines your credit score?

• Find out at:• www.myfico.com

• Answer questions about the 5 factors that determine your score.

How can my credit score affect my life?

http://www.youtube.com/watch?v=WtYpZTLhAnM