credit cards. questions we will answer… what is credit? what does it cost to use credit? what are...
TRANSCRIPT
Credit Cards
Questions we will answer…
• What is credit?• What does it cost to use credit?• What are the advantages of using credit?• Where can you get credit?• What questions should you ask yourself
before you use credit?• What happens if you misuse credit?
What is credit?
• Someone is willing to loan you money.
• You are promising to pay it back.
What is interest?• The cost of someone loaning you
money.
APR• Annual Percentage Rate
• The amount of money it costs you each year to use credit.
• Usually shown in an %.
Other fee/ charges…• Annual Fee– Yearly charge for the privilege of using credit
• Finance Charge– The actual dollar cost of using credit
• Origination Fee– Charge for setting up the loan (houses)
• Grace Period– Number of days where there is no fees
• Minimum Payment– The amount that you have to pay (2%)
What is the loan term?
This is the length of the loan
Loan Length matters…
Principle X Rate X Time =
Total you will pay back
Lets calculate…
If you buy your dream house for 100,000 at 10% for a 30 year term.
$100,000 X .10 X 30 =
$300,000
Are there benefits to credit?
• Emergencies– Your car breaks down… - Your water heater dies…
• Buying something now– You can have the house now - the car now…
• Safe– Wont have large amounts of cash on you
• Bonus/ Points/ Rewards– Get something back for your money
Where…
Shopping for the best credit card
• Compare at least three cards• Ask your parents• Look at– APR– Annual Fee– Grace Period– Minimum Payment– Credit Limit– Other Fees
What can happen if you don’t pay it back?
What is a Credit Report?• Is a report of your credit history.
• It shows your personal financial transactions
• Also, shows loans that you have applied for, gotten, paid back.
• Also, shows if you pay bills on time, or not at all.
Filing Bankruptcy
• It is a “Legal process”
• Allows those in excessive debt to get out of debt
Chapter 7 – Chapter 13
• Stays on your record for 10 years
Legal Charges
• Face jail time
Repossess
• They come and reclaim their property
Liens
• Cannot sell your ______ without paying