Project Credit Smarts

The Office of Consumer Affairs and Business Regulation

• The Office of Consumer Affairs and Business Regulation empowers Massachusetts consumers through education and outreach and maintains a fair and competitive marketplace.

• Agencies:– Division of Banks (DOB)– Division of Insurance (DOI)– Division of Professional Licensure (DPL)– Division of Standards (DOS)– Department of Telecommunications and Cable (DTC)

What is Consumer Affairs?

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What is Project Credit Smarts?

• Educational campaign; knowledge sharing• Topics include:

– Bank accounts and debit cards– Credit cards– Credit Reports– Student loans– Protecting against identity theft – Maintaining good financial habits

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Banking

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Bank Accounts & Debit Cards

• Having a bank account

• Choosing a bank account

• Tips for debit card use

• Debit card protections

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Credit Cards• Good reasons to have a credit card

• Choosing a credit card

• Tips on using a credit card

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Minimum Payments Cost $$$

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Item Price Interest Rate (APR)

Years to Pay Off

Total Interest

Paid

Total Cost

TV   $500 18%  8    $439    $939

Computer $1,000 18% 19 $1,899 $2,899

Furniture $2,500 18% 34 $6,281 $8,781

Note: All payments are the monthly minimum of two percent of the outstanding balance or $10, whichever is greater. Years are rounded to the nearest whole year.

Information from the FDIC.

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Paying More PaysStarting Balance

Interest Rate (APR)

Monthly Payment

Years to Pay Off

Total Interest

Paid

Total Cost

$5,000 18% minimum 46 $13,926 $18,926

$5,000 18% $100 8    $4,311    $9,311

$5,000 18% $250 2      $986    $5,986

Note: The minimum payment is assumed to be two percent of the outstanding balance or $10, whichever is greater. Years are rounded to the nearest whole year.Information from the FDIC

Credit CardsWhat if you can’t pay?

• Late fees

• Penalty rates

• Negatively affects credit history

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Building Credit: Credit Card Alternatives

• In-store credit cards

• Piggybacking

• Secured cards

• Paying other bills on time

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Credit Reports

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YOU ARE ENTITLED TO A FREE CREDIT REPORT

www.annualcreditreport.comor

call (877) 322-8228

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Credit Reporting AgenciesThe three major credit reporting agencies

are:

Equifax Experian TransUnion800-685-1111 888-397-3742 800-888-4213www.equifax.com www.experian.com www.transunion.com

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Check Your Credit Report• Background info• Account accuracy• Negative info• Dispute errors• Written explanatory statement

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What is a credit score?• NOT free

• Credit worthiness

• How scores are calculated

• What your scores mean

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How do I improve my

credit?• Don’t add more debt• Make timely payments• Maintain low balance (30% of credit limit)• Careful about new lines of credit• Dispute old negative information• Budget• Save money, if possible

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Student LoansWhat You Should Know

• Student Loan Process• Federal versus Private• Repayment• Delinquency and Default (not

Bankruptcy)• Counseling and Information

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Federal Student Loans

Private Student Loans

Repayment in school?

No – deferred Maybe – depends

Interest Rate

Fixed Variable

Subsidized?

Some undergrads may qualify No

Credit required?

No, except for Direct PLUS (can help you build credit)

Yes, credit required before you can take out the loan

Cosigner? Mostly, no Mostly, yes

Tax benefits

Interest payments may be tax deductible

Interest payments are probably not tax deductible

Consolidation

Direct Loan Consolidation No Direct Loan Consolidation

Deferment or Forbearance

Temporary allowances Maybe, depends

Repayment Options

Several options Maybe, depends

Loan Forgiveness

Public loan forgiveness Maybe, but unlikely

Free Help 800-4-FED-AID Go to cfpb.gov student loan ombudsman

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Repayment• Monthly payment• Types of repayment (federal loans)

– Standard– Extended– Graduated– Income-Contingent– Income-Sensitive– Income-Based

• Consolidation• Forgiveness• Postponement

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Delinquency and Default• Delinquency

– “Grace period”– Begins the day after you miss a payment– Creditor must send you notice of

delinquency

• Default– Usually the entire loan comes due– Ways to get out of default

• Beware Bankruptcy24

More Information & Counseling Contacts

• Government– Consumer Financial Protection Bureau:

http://www.consumerfinance.gov/paying-for-college/– U.S. Department of Education:

www2.ed.gov/students/landing.jhtml– Federal Student Aid: studentaid.ed.gov– National Student Loan Data System for information about

your individual loans: nslds.ed.gov– Information about loan consolidation:

loanconsolidation.ed.gov– Glossary of Student Loan terms: studentaid.ed.gov/glossary

• Non-profit– American Student Assistance: asa.org

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Safeguarding your credit• Don’t lend your cards

• Contact your creditor fast about lost or stolen cards

• Notify any one of the credit reporting agencies

• Junk Mail: Dangerous?

• YOU CAN OPT OUT OF CREDIT CARD MAILINGS!Call (888) 5-OPTOUT / (888) 567-8688 or go online at www.optoutprescreen.com

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• How to spot identity theft

• How to prevent identity theft

• Fraud Alert

Protect Yourself

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Think you’re a victim of ID theft?

Toll Free: (877) IDTHEFT (877-438-4338)

TTD: (202) 326-2502

or visit:www.consumer.ftc.gov/idtheft

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Overwhelmed by your finances?

• Act fast

• Contact your creditors

• Ask for professional help

• Keep track of finances

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Who can help

Boston Branch31 Milk St., Ste. 515Boston, MA 02109

Randolph Branch247 N. Main St., Ste.

200Randolph, MA 02368

Worcester Branch340 Main St., Ste. 813Worcester, MA 01608

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Lowell Branch40 Central St.

Lowell, MA 01852

Woburn Branch800 W. Cummings Park, Ste.

1075Woburn, MA 01801

Money Management Int’lwww.moneymanagement.org

Who can helpFederal Trade Commission 600 Pennsylvania Avenue, NW

Washington, DC 20580(202) 326-2222

www.ftc.gov

FTC Article on how to select a credit counselorhttp://www.consumer.ftc.gov/articles/0153-choosing-credit-

counselor

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Our PartnersFederal Trade Commission Northeast Region

Federal DepositInsurance Corporation

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THANK YOU!For more information, log onto

www.mass.gov/consumer

Or call the Consumer Hotline at

(617) 973-8787 / (888) 283-3757