Personal Finance Managing Credit Bill Klinger

Personal Finance Review Types of credit Credit Bureaus Identity theft Non-installment Installment Revolving open-end credit Credit Bureaus FICO score Improving credit score Identity theft How stolen How to protect

Credit Cards Advantages Disadvantages Do not need to carry cash or checks Free financing, if pay off Track expenses Builds credit Disadvantages Buy things cannot afford Buy more than you should Build up debt

Credit Cards Application information Credit check Birth date SSN Monthly/annual income Debts Credit check Look for risks

Credit Cards Providers Credit limit Overdraft protection Annual fee Visa, Master Card, Discover, American Express Retailers E.g. Best Buy, Macy’s, Exxon/Mobil Credit limit Overdraft protection High fees Don’t spend to the max Annual fee Avoid unless get real value E.g. free checked bags

Credit Cards Grace period Interest rate About 20 days after statement Pay it off promptly! Interest rate 15-20% Don’t bother with different ways of computing interest Can not get ahead financially if owe credit cards Pay it off!

Managing Credit Cards Do not carry more credit cards than necessary Do not buy if can’t pay it off Do not use the maximum credit limit If have a balance Pay it off before paying off other debt Must make required payments on all debt Pay it off before investing You aren’t going to make 20% a year investing Can contest charges Call credit card company Tell them the nature of your challenge

In Class Do TV purchase example In groups of two Financial Planning Problems at the end of Chapter 8 1 – 7, 9