1 Staying on Good Terms: Managing Credit and Debt OSFA Office of Student Financial Aid

2 Types of Credit Credit Alternatives Open-End Credit Short term: electric and power bills Revolving: credit, gas, and retail cards Closed-End Credit Automobile Loans Mortgage Loans Student Loans

3 Buy/consume now, pay later Emergencies Establish favorable credit history Insurance and fraud protection The Upside of Credit Use

4 The Downside of Credit Use The price of credit is high Additional fees add to the cost Credit makes it easy to overspend You are vulnerable to fraud Source: Garman & Forgue (2003), Personal Finance Seventh Edition. Houghton Mifflin pg. 165

5 Credit and Debt: All Cards Are NOT Created Equal Credit –C–Credit Cards –C–Charge Card Debt –S–Stored Value Card –A–ATM/Check Card Smart Cards* *Source:

6 Credit Myths You must give your permission for a credit report to be issued The credit reporting agency denied me credit When paid, the bad debt will go away Im not responsible for debts on joint accounts or co-signed accounts if they are not my purchases

7 When Parents Give Students Credit Cards Nationally, college graduates leave school with an average of $18,900 in debt from student loans... …(a consumer credit counselor) has worked with students with as much as $14,000 in credit-card debt. Source: method=xml&ID=trafficlogic&story_id= &password=ldfcly

8 Ten Credit Mistakes: 1. Overspending 2. Carrying a permanent balance 3. Making only minimum payments 4. Holding too many credit cards 5. Assuming low interest rates stay the same Continue...

9 Ten Credit Mistakes: 6. Paying higher interest than necessary 7. Paying extra for incentive credit cards 8. Not reading the disclosure statement 9. Paying off the wrong credit cards first 10. Ignoring extra fees or penalties

10 Signs of Credit Trouble Charge credit cards to the limit Use one card to pay for another Do not know your total debt Borrow from family members to pay debt Using cash advances

11 Staying Out of Credit Card Trouble Shop for the credit card with the best terms Limit the number of credit cards you have Dont charge perishable items Payoff as much as possible every month

12 Pay As Much As You Can! ($3,800 Balance at 17% APR)

13 Timing Makes a Difference Try to pay all credit card bills on time Pay off the credit card with the highest interest rate first Dont Buy on impulse - Delay gratification Notify your creditors if you cant make your payments on time

14 Talking to Your Creditor Ask them to lower your interest rate Ask them to lower your credit limit Ask them to change when your bill is due Discuss your situation with them and set up a payment plan

15 Other Credit Card Suggestions Report lost/stolen cards immediately Store your credit cards in a safe place Track your expenses Document your concerns in writing Order a copy of your credit file regularly

16 Whats In Your Credit File? Personal Identification Information Public Record Information Collection Agency Account Information Credit Account Information Companies That Requested Your Credit File Most negative information stays on your file 7 yrs, except for bankruptcy which can stay up to 10 yrs.

17 Your Credit Report Impacts: Purchasing a car Purchasing a home Obtaining a loan Renting an apartment Auto and life insurance Acquiring a cell or home phone Seeking employment

18 How to Obtain Your Credit Report EQUIFAX: EXPERIAN: TRANS UNION:

19 Beware of Higher Costs Payday Loans Tax Refund Loans Rent-to-Own Car Title Loans Bounced Check Protection

20 Credit Laws Fair Credit Reporting Act Equal Credit Opportunity Act Truth-In-Lending Fair Credit Billing Act Fair Debt Collection Practices Act

21 Consumer Credit Counseling Services Budget Counseling Debt Repayment Plan –you agree to not use the cards –pre-arranged agreement with creditor(s) for reduced payment and interest in some cases –you pay CCCS and they pay your creditors –CCCS will not put the repayment plan on your credit report BUT creditors may

22 For Individual Help Contact: Consumer Credit Counseling Service CCCS

23 Web site address Phone #

24 Special Thanks to...