Credit Vs. Debit cards

What are Credit Cards? Pre-approved credit which can be used for the purchase of items now and payment of them later. Discussion Topics: Ask people to give their answers to What are Credit Cards? Before giving the “formal” definition.

Why Use a Credit Card? Establish good credit rating United States and abroad Emergency buying power Extra identification Often required to hold a reservation (hotels, cars, etc.) Discussion Topic: What other reasons can the students come up with for having a credit card, or ask them for their ideas before presenting the ones on the slide.

Why Not Use a Credit Card? Improper use can damage credit rating Higher risk for impulsive buying and overspending Debt trap when used unwisely High interest rates Paying off purchases from past Possible hidden fees & surcharges Privacy is an increasing concern Identity theft easier Discussion Topic: What other reasons can the students come up with for not having a credit card, or ask them for their ideas before presenting the ones on the slide.

A Schumer Box you May Expect To See Annual Percentage Rate for purchases and balance transfers* 2.99% APR (.00819% daily periodic rate) on purchases and balance transfers until the first day of the billing cycle that includes the six (6) month anniversary date of the opening of your account. In the absence of the introductory rate, 12.99% APR(.03559% daily periodic rate) on purchases and balance transfers.** Grace period for repayment of the balance for purchases You will have a minimum of 25 days without a finance charge on new purchases if the total New Balance is paid in full each month by the statement closing date. Method of computing the balance used in calculating finance charges for purchases Average daily balance (including new purchases) Annual fee $25 Minimum finance charge For each Billing Period that your Account is subject to a finance charge, a minimum total Finance Charge of $0.50 will be imposed. Miscellaneous fees Cash advance fee: 2.5% of amount of the cash advance, but not less than $2.50. Late payment fee: $25 Over-the-credit-limit fee: $25 Returned check fee: $25 Schumer box source: www.onecreditguide.com/Basics/Fine-Print.htm

A Schumer Box and Credit Card Terms Explained Annual Percentage Rate for Purchases   Grace Period for Purchases Minimum Finance Charges Balance Calculation Method for Purchases Annual Fees Transaction Fees for Cash Advances Late Payment Fees 19.9% Not less than 25 days $.50 when a finance charge at a periodic rate is charged Average daily balance method (including new purchases) $20 per year 2% with a minimum fee of $3 $29 Annual Percentage Rate (APR): interest rate charged for amount borrowed in terms of percentage per year Grace Period: amount of time allowed before finance charges (interest or cost of credit) are applied

Using a Credit Card Properly Only use when you know for sure you can pay it off Record all expenses and keep receipts Check statement for errors Pay off completely and timely

Safety Tips Sign card with signature and “Please See ID” Do not leave cards lying around Close unused accounts in writing and by phone, then cut up the card Do not give out account number unless making purchases Keep a list of all cards, account numbers, and phone numbers separate from cards Report lost or stolen cards promptly

Are Debit Cards a type of Credit Card? NO! Debit Cards are: Not the same as credit cards Not a form of credit at all Directly linked to your bank account. Debit=Credit Debit cards allow payment and purchase to happen simultaneously

Debit card is cash in the form of a plastic card. What are debit Cards? Debit card is cash in the form of a plastic card. Discussion Topics: Ask people to give their answers to What are Credit Cards? Before giving the “formal” definition.

Why Use a debit Card? Use instead of cash or check Used to pay car payments, rent etc. Taken from checking account PIN-system security No annual fee Discussion Topic: What other reasons can the students come up with for having a credit card, or ask them for their ideas before presenting the ones on the slide.

This highly competitive market has resulted in impressive card growth Debit Cards Cheques Cash High take up of cards Credit Cards Cash is the largest volume 129% -11% +11% +20%