2 types of accounts: savings and checking Do not spend more than you have in the account (you can get overdraft protection) ALWAYS REVIEW YOUR BANK STATEMENT!

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Presentation transcript:

2 types of accounts: savings and checking Do not spend more than you have in the account (you can get overdraft protection) ALWAYS REVIEW YOUR BANK STATEMENT!

Banks may charge fees for: Having an account Ordering checks Failing to keep a minimum balance Bouncing a check Guest ATM fees ATM: automatic teller machine Debit Cards: automatically deduct the amount from your checking account

3 ways to pay for an item: cash, savings or checking accounts, and credit

If you lose your checkbook tell you bank immediately to stop payment! If you lose your check card you can be liable for up to $50 but you must notify your bank immediately!

You are buying something now with the promise to pay later. Creditors: People who lend money or provide credit… Give an Example Debtors: People who borrow money or buy on credit

pKE pKE Why do people need credit? What are forms of credit? Is credit good?

Finance Charge : the additional money owed to a creditor for the privilege of borrowing money (example: interest) 2 types of Credit : Secured and Unsecured Unsecured Credit : credit extended with a promise to repay in the future, not required to pledge property to get credit. - Credit cards and store accounts are unsecured credit

Secured Credit: credit in which the debtor must put up some property of value in case a loan is not repaid (collateral)

When paying a credit bill you must make the minimum monthly payment! Interest will be charged on the unpaid balance. (usually 18-20%!) Annual Percentage Rate (APR): interest rate for credit cards

Fair Credit Billing Act: requires that if you complain in writing about the billing error within 60 days of the statement, the creditor must respond to the complaint within 90 days

Student loans are easy to get and generally offer low interest rates. FAFSA Form! (Free Application for Federal Student Aid)

Interest Rates: Usury: (Use Ur E) charging an interest rate above the legal limit Variable Interest Rates: the rate you are charged changes based on economic conditions Late Fees Service Fee

Loan Sharking: lending money at high, often illegal, rates (often used by people who cannot get legal loans) Balloon Payments: the last payment is much larger than the monthly payments Acceleration Clause: makes the entire debt due immediately if a payment is not made on time or another condition is not met

Bill Consolidation: combining all your bills into a single one Can lead to payments over a longer period of time and higher interest rates

Truth in Lending Act: a law that requires creditors to give you certain basic info about the cost of buying credit Must tell you IN WRITING the finance charge and APR Must tell the consumer about fees for late payments

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Is the consumer a reliable person? Does the consumer have a steady income? Can the consumer pay for the items they purchase? Does the consumer have a good credit rating?

Equal Credit Opportunity Act: protects consumers against credit discrimination Contact the Federal Trade Commission if you think you have been discriminated against by a company.

The Equal Credit Opportunity Act requires creditors to tell you specifically WHY they are denied credit You should obtain a copy of your credit report to make sure all information is correct. Your credit history (good or bad) stays with you for 7 years!

Default: when a consumer is unwilling to or unable to pay a debt If you Default … Create a budget Ask your creditor to refinance your credit

Bankruptcy: a procedure when a person places their assets under the control of a court in order to be relieved of their debt Chapter 13 Bankruptcy: the court supervises a person and allows them to pay off the debt over an extended period of time Chapter 7 Bankruptcy: the court takes control of a persons assets, sells them, and pays off as much debt as possible

Bankruptcy remains on your credit report for 10 years and it can be hard to obtain credit or borrow money.

Fair Debt Collection Practices Act: protects consumers from abusive and unfair collection practices by debt collectors. Creditors CAN repossess collateral if you default on a loan If you fail to pay a loan the creditor can sue you in court. Creditors can garnish (withhold) your wages up to 25%

Page A-B Page 307 A-C

Create a visual (Cartoon, Sketch, Graphs) to illustrate 3 of the 4: loan sharking, balloon payments, acceleration clauses, and bill consolidation) You must include an explanation of what each visual is about. (1-2 sentences)