Rate of Return A percentage amount of return on an investment

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Presentation transcript:

Rate of Return A percentage amount of return on an investment Rule of 72: A rule used to calculate the doubling of money.(72 divided by the anticipated interest rate gives the number of years it would take to double one’s money). For example, at 4% interest it would take 18 years to double one’s money.

How would you define credit? What are different types of credit?

Definition Deferred payment of a loan or purchase The word is related to credible, the belief or confidence in something Credit is confidence in a buyer’s ability to repay a loan

Types of Credit Bank loans Mortgages Credit cards Bonds

Credit Card Vocabulary APR v. APY Creditor Finance Charge Predatory lending Principal Annual Fee Grace Period Minimum Payment Disclosure Statement Overlimit Fee

Is Credit Good For You?

Advantages of Credit Immediate gratification Establish a credit rating Help out with emergencies Earn special bonuses Be able to act on the spur of the moment

Disadvantages of Credit Paying more for a product or service Paying large finance or interest charges Being tempted to spend too much Paying off cards can become a huge financial burden. Paying for purchases continues even after they are worn out or gone. Cards can become a nightmare if stolen

…Please do not sign any send any of these Open the offers and… Locate the interest rate you (me or my wife) will pay Is there an annual fee? How do you know? If so, what is it? What perks or incentives does the card offer? Is there any language about the minimum payment? If so, what does it say? AND lastly …Please do not sign any send any of these

The Cost of Using Credit $2,000 Charged to a Credit Card You make the required monthly payment @ 18.9% interest plus $40 annual fee http://www.dinkytown.net/java/CompoundSavings.html

Credit Card Facts The average age at which a U.S. consumer under the age of 35 first adopted a credit card is 20.8 years. The average age of credit card adoption for a consumer over the age of 65 is 40.6 years.

More Credit Card Facts The average American household with at least one credit card carried a total balance of $14,750. Of the total U.S. revolving debt of $796.5 billion, 98% is made of credit card debt. There are over 176.8 million credit card holders and 609.8 million credit cards held by US consumers.

Even More Facts The average annual percentage rate on credit cards is 14.58%. Punitive rates are 28.49% A recent survey found that one in five individuals are sometimes (14%) or always (6%) unable to pay their credit card balances each month.

Beware! Minimum payments can mean years to pay off the balance Credit card companies may charge a fee just for having the card.

Credit Card Facts