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Your Money

Your Money. An Introduction to Personal Finance. Credit Control. Credit Card Basics. Credit Card:. A card that allows you to buy something on credit. Credit:. Buying a product or service now but agreeing to pay for it later. Credit is a LOAN the credit card company gives you.

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Your Money

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  1. Your Money An Introduction to Personal Finance
  2. Credit Control
  3. Credit Card Basics Credit Card: A card that allows you to buy something on credit. Credit: Buying a product or service now but agreeing to pay for it later. Credit is a LOAN the credit card company gives you. You can pay back parts of that loan in monthly installments with interest or all at once and owe no interest.
  4. For Example…
  5. Credit Vocabulary Interest Money paid for the use of money Interest Rate (APR) Annual Percentage Rate = the rate of interest being charged for a loan over a year’s time. The money you still need to pay off on your credit card bill after the end of the statement period. Balance Minimum Payment The least amount of money you can pay the credit card company each statement period. Grace Period The length of time before your loan starts accumulating interest. Credit Limit The highest amount of money you can charge to your card.
  6. Advantages of Credit
  7. Disadvantages of Credit
  8. YOU NEED TO KNOW ABOUT:Fees, late payments, intro rates… Fees = Some credit cards charge you a monthly fee or an annual fee for having the option of borrowing their money Late Payments = If you don’t pay your credit card bill on time, you will be charged a late fee, AND your interest rate might go up…temporarily or permanently Intro Rates = Some credit cards give you a low interest rate to start off with, but then that rate increases after a few months or a year. Make sure to read the fine print in order to find out if a credit card would raise your interest rate after a while
  9. Debt Rihanna charges $1,000 to a credit card with an APR of 18% $1,000 She owes: Statement 1 $ 970 + INTEREST She makes a minimum payment of $30 $984.55 She owes: Statement 2 She makes a minimum payment of $30 $954.55 + INTEREST $968.86 Statement 3 $$$$$
  10. Debt (continued) If Rihannacontinues to make the minimum payment ($30) each month, how long will it take her to pay off her credit card bill and how much interest will she end up paying? 3.9 years! $396 in interest! HOW MUCH DID THE PURSE really COST HER? What?!
  11. Payment amount matters! $500 charge on a credit card with 16.5% APR Minimum Payment of $10 Time to Pay off? Interest Paid? Monthly Payment of $25 Time to Pay off? Interest Paid? Monthly Payment of $100 Time to Pay off? Interest Paid? 7 years, 4 months $376 2 years What if you paid in full? $92 Time to Pay off: Interest Paid: 1 month $0 6 months $22
  12. Credit History Credit History A record of your financial history Like a high school transcript Credit Score A number between 300 and 850 that represents the strength of your credit record. Like a high school GPA Below 620 => bad score Above 760 => very good score
  13. Your Credit Score Used to determine your “credit-worthiness” to lenders
  14. Maintaining a Good Score
  15. Why Scores Matter
  16. EXAMPLE: Two Guys, Two APRs The High Credit Score Guy- get 5% interest on his car loan Low Credit Score Guy -13% interest on his car loan THE BETTER YOUR CREDIT SCORE IS, THE LESS YOU PAY FOR THINGS YOU WANT!!!
  17. Freecreditreport.com Freecreditscore.com
  18. Your Credit Report Annualcreditreport.com: This is the ONLY place to go to get a free credit report A report of all your credit history (Like a school report card)
  19. Tips for Smart Credit Use
  20. Be Their Worst Customer: Pay Your Bills On Time and IN FULL!
  21. Thank You
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