Credit Cards

What is the difference between the credit cards?

Do I need one?

What are credit cards for?

Why are there so many regulations on credit cards?

How does it affect my credit score?

Name Credit Card Companies?

In a groups of three (3), write down all the different types of credit card companies that you know, have seen, or use?

Think about the different types of credit cards your parents or friends have.

Major Credit Card Companies

MasterCard

Visa

Discover

American Express

Companies

Department Stores

Sears (SO)

Macy’s (SO)

Neiman Marcus (SO)

Victoria Secrets (SO)

Banana Republic/Gap (SO)

Banks

Chase

Bank of America

SO – Only used at store

Airline

Hawaiian Airlines

United

Wholesale

Costco

Sam’s Club

Businesses

Home Depot (SO)

Lowes (SO)

Store Credit Cards

1. Why do so many stores have credit cards?

2. Why do many stores only have credit cards that can be used at their own store?

Store Credit Cards

Company saves money when customers use their card

Companies pay fees to credit card companies for the convenience (percentage of sale or flat fee)

Companies make money on credit card balances that are not paid in full

Store Credit Cards typically have the highest interest rates of all credit cards

Allows company to track purchasing habits and send you coupons

Sends you junk mail for upcoming sales to entice buying

Reduces the amount of liabilities the companies have by only allowing in store purchases on card

Smart or Unsmart Business Owners?

Companies pay fees to credit card companies for the convenience (percentage of sale or flat fee)

Why do some businesses accept credit cards while other businesses don’t?

Minimum Purchase Amounts

Why do some businesses require a minimum dollar amount to use a credit card?

Interest Rates

What is an interest rate?

What is the typical interest rate for a credit card?

Interest Rates

Vary from 7-36% on average depending on your credit score and credit history.

In Brazil – it can range from 50%-300% for interest. Why?

Department Store cards often yield the highest Annual Percentage Rates (APR)

Business Cards and Exclusive cards may hold lower

interest rates. Why?

Selecting The Right Card

Interest Rates vs. Interest RatesHow to select a credit card?

Benefits of credit cardsAssessing multiple offers

Whose got the best offer?

In your group, use the provided credit card offers write down the following information:

1. Who is offering the credit card?2. What is the interest rates (APR)?3. Due Dates (Billing Cycle)4. Benefits of the cards5. Late payment fees6. Annual fees7. Transaction fees

When completed switch offers with another group

Which offer do you prefer?

Between the offers you received, which offer will your group accept?

What other research could you conduct to do know what are your best options?

Quiz

1. Why is knowing your interest rate (Annual Percentage Rate) so important?

2. Why is understanding the fees important in selecting a card?

Spending vs. Paying

Paying off your balances

How to manage your money

Paying off Balances

Spend only what you can afford to pay

Avoid paying only minimums Minimum Payments are typically calculated by 2-4%

plus interest rate or fees of the card balance

$100 would have a minimum payment of $2-4 plus interest rate or processing fees

http://www.creditcards.com/calculators/payoff.php

Balance Problems

What if you have two cards and you cannot pay off both balances this month. How would you pay your credit card bills?

Quiz #2 – Balance Problems

You currently make $600 a month

What would you do?

What if you only had $350 to pay bills?

VISA Card

Balance $1000

Minimum Payment $50

15% APR

MASTERCARD

Balance $400

Minimum $20

12% APR

Quiz #3 – Balance Problems

What if you only had $500 to pay bills?

What would you do?

VISA Card

Balance $1000

Minimum Payment $15

10% APR

MASTERCARD

Balance $200

Minimum Payment $50

18% APR