Credit Cards What is the difference between the credit cards? Do I need one? What are credit cards for? Why are there so many regulations on credit cards? How does it affect my credit score?

Name Credit Card Companies? In a groups of three (3), write down all the different types of credit card companies that you know, have seen, or use? Think about the different types of credit cards your parents or friends have.

Major Credit Card Companies MasterCard Visa Discover American Express

Companies Department Stores Banks Airline Wholesale Businesses Sears (SO) Macy’s (SO) Neiman Marcus (SO) Victoria Secrets (SO) Banana Republic/Gap (SO) Banks Chase Bank of America SO – Only used at store Airline Hawaiian Airlines United Wholesale Costco Sam’s Club Businesses Home Depot (SO) Lowes (SO)

Store Credit Cards Why do so many stores have credit cards? Why do many stores only have credit cards that can be used at their own store?

Store Credit Cards Company saves money when customers use their card Companies pay fees to credit card companies for the convenience (percentage of sale or flat fee) Companies make money on credit card balances that are not paid in full Store Credit Cards typically have the highest interest rates of all credit cards Allows company to track purchasing habits and send you coupons Sends you junk mail for upcoming sales to entice buying Reduces the amount of liabilities the companies have by only allowing in store purchases on card

Smart or Unsmart Business Owners? Companies pay fees to credit card companies for the convenience (percentage of sale or flat fee) Why do some businesses accept credit cards while other businesses don’t? Not everyone carries CASH. But by not accepting credit card it creates a higher profit margin on sales.

Minimum Purchase Amounts Why do some businesses require a minimum dollar amount to use a credit card? Last question stems from small businesses that require $5 for purchases or bars that often require $25 minimums to use cards.

Interest Rates What is an interest rate? What is the typical interest rate for a credit card?

Interest Rates Vary from 7-36% on average depending on your credit score and credit history. In Brazil – it can range from 50%-300% for interest. Why? Department Store cards often yield the highest Annual Percentage Rates (APR) Business Cards and Exclusive cards may hold lower interest rates. Why? Businesses and the rich spend more money so unpaid bills will still be substantial despite lower APR. Exclusive cards, for the top 1-2% of individuals – typically $250,000+ a year for income, may have the lowest if not zero interest as some tack on annually fees for membership or fees for acquiring specialty items or exclusive trips/opportunities that are unique (money can buy anything).

Selecting The Right Card Interest Rates vs. Interest Rates How to select a credit card? Benefits of credit cards Assessing multiple offers

Whose got the best offer? In your group, use the provided credit card offers write down the following information: Who is offering the credit card? What is the interest rates (APR)? Due Dates (Billing Cycle) Benefits of the cards Late payment fees Annual fees Transaction fees When completed switch offers with another group

Which offer do you prefer? Between the offers you received, which offer will your group accept? What other research could you conduct to do know what are your best options?

Quiz Why is knowing your interest rate (Annual Percentage Rate) so important? Why is understanding the fees important in selecting a card? 1. APR, Fees, Due Dates

Paying off your balances How to manage your money Spending vs. Paying Paying off your balances How to manage your money

Paying off Balances Spend only what you can afford to pay Avoid paying only minimums Minimum Payments are typically calculated by 2-4% plus interest rate or fees of the card balance $100 would have a minimum payment of $2-4 plus interest rate or processing fees http://www.creditcards.com/calculators/payoff.php Link provided shows how much interest you would pay, how long it would take to pay off, and a graph to show payment. In the INPUT tab I will be contrasting months versus including a set amount to show the difference in interest paid (Desired Months or Desired Monthly Payment).

Balance Problems What if you have two cards and you cannot pay off both balances this month. How would you pay your credit card bills? Students should look at which card has the highest interest rate and pay that balance off first completely or primarily. The other card needs to have at least the minimum payment to avoid being considered delinquent.

Quiz #2 – Balance Problems You currently make $600 a month What would you do? What if you only had $350 to pay bills? VISA Card Balance $1000 Minimum Payment $50 15% APR MASTERCARD Balance $400 Minimum $20 12% APR

Quiz #3 – Balance Problems What if you only had $500 to pay bills? What would you do? VISA Card Balance $1000 Minimum Payment $15 10% APR MASTERCARD Balance $200 Minimum Payment $50 18% APR