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ALERT!!!!

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ALERT!!!!

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  1. ALERT!!!! COMING SOON TO A MAILBOX NEAR YOU

  2. CREDIT CARD OFFERS!!!

  3. How did you feel about asking to borrow something? • What did you consider when agreeing to loan the item? • What are the reasons you denied or considered denying the request?

  4. UNIT 5 CREDIT…… BUY NOW…..PAY LATER

  5. THE SWORD CUTS BOTH WAYS: A TOOL OR A TRAP

  6. CREDIT The willingness to loan you money (called principal) in exchange for promise to pay it back, usually with interest (cost for using someone else’s money).

  7. CREDIT COSTS • AMOUNT BORROWED • LOAN LENGTH • RATE OF INTEREST

  8. Interest Rate: 8%

  9. Loan Rate: 10%

  10. 5-Year Loan

  11. WHAT ARE THE BENEFITS? • ACCESS TO CASH IN AN EMERGENCY • ABILITY TO USE IT NOW • SAFETY AND CONVENIENCE • EARN REWARDS

  12. WHERE TO GET CREDIT • BANKS AND CREDIT UNIONS • OTHER FINANCIAL INSTITUTIONS • STORES • COLLEGES • FEDERAL AND STATE GOVERNMENT

  13. CREDIT CARDS • BUY NOW PAY LATER • COST • APR • ANNUAL FEE • GRACE PERIOD • MINIMUM PAYMENT (2%) • CREDIT LIMIT

  14. HOW MUCH IS TOO MUCH • CREDIT CARD PAYMENTS • MORTGAGE PAYMENTS

  15. COMPARING CREDIT OFFERS • APR • LENGTH OF LOAN • MAX AMOUNT OF LOAN • MINIMUM PAYMENT • ANNUAL OR UP-FRONT FEES • PREPAYMENT PENALTIES • INCOME NEEDE TO QUALIFY

  16. CREDIT REPORTS • EXPERIAN • EQUIFAX • TRANSUNION

  17. CREDIT HISTORY • YOUR SCORECARD IN FINANCIAL MATTERS • FOR PAST 7-10 YEARS • ANY FINANCIAL ACCOUNT • POTENTIAL LENDERS • POTENTIAL EMPLOYERS

  18. HOW TO BUILD GOOD CREDIT HISTORY • USE A CHECKING ACCOUNT • DON’T BOUNCE CHECKS - OVERDRAW • OPEN A SAVINGS ACCOUNT – REGULAR DEPOSIT • MAKE PAYMENTS ON TIME (RENT)

  19. LENDER WANT TO KNOW • CAPACITY: ABILITY TO REPAY LOAN, STEADY/RISING INCOME, EMPLOYMENT, DEBT • CHARACTER: TRUSTWORTHY? CREDIT REPORT SHOWS CHARACTER • CAPITAL: WHAT IS YOUR WORTH? VALUABLE ASSETS? (CAR, HOUSE, COLLECTIBLES)

  20. ASK YOURSELF • DO I REALLY NEED THIS? • CAN I QUALIFY FOR CREDIT? • WHAT IS APR? • ARE THERE ADDITIONAL FEES? • HOW MUCH ARE THE PAYMENTS? • CAN I AFFORD THE MONTHLY PAYMENT • WHAT WILL HAPPEN IF I DON’T PAY? • WHAT WILL I GIVE UP TO PAY FOR IT? • ALL THINGS CONSIDERED, IS IT WORTH IT?

  21. RIGHTS / RESPONSIBILITIES • SIGNATURE = LEGALLY OBLIGATED • FORCLOSURE / REPOSSESS • CONSUMER RIGHTS: • TOTAL COST OF USING CREDIT • ALLOWED TO CANCEL -3 DAYS • CREDIT CARDS-$50.00 LIMIT

  22. UNDER EXCESSIVE DEBT • HARDER GETTING OUT THAN IN • SPEND LESS THAN YOU EARN • BUDGET • TALK TO LENDERS • HIGHEST RATE TO LOWEST RATE • CREDIT COUNSELOR

  23. BANKRUPTCY • SHOULD BE LAST RESORT • IS A LEGAL PROCESS • Chapter 7: ERASES MOST OF YOUR DEBT. MUST QUALIFY.FINANCIAL COUNSELLING. • Chapter 13: ALLOWS TO PAY BACK WITH MORE TIME. COURT OVERSEES THE REPAYMENT PLAN.

  24. BANKRUPTCY COSTLY TO ALL • LENDERS ABSORB LOSSES • RESPONSIBLE BORROWERS PAY HIGHER RATES • 10 YEARS IN CREDIT RECORD – HARDER TO GET CREDIT