 Take a few minutes to look over your notes if you need to take/retake yesterday’s Quiz › Use the resources on Moodle to help you study › We will do a practice tax calculation problem together in a few minutes

 Personal Finance Test › Next Wednesday (March 13 th ) › Quiz on 3 sections of notes 1.Financial Planning 2.Budgeting 3.Payroll Deductions (including tax calculations) 4.Credit 5.Checking

 What is some information, or advice, you have heard about credit cards? › Log into Moodle and complete the “Credit Card Attitude Survey”  Save when you finish

 Credit - means someone is willing to loan you money in exchange for your promise to repay it, usually with interest. It is a contractual agreement › Interest - is the amount you pay extra for the convenience of using someone else’s money.  It is a privilege – it can be damaged or taken away… but if used wisely, can be of great benefit to the borrower  It is something that can have a great impact on your financial future

 Please go to Moodle and make a decision on the choice question › Let’s see the results

 Do some research on the positives of credit (if you will use credit cards in the future) OR the negatives of credit (if you chose NOT to use credit cards in the future)  Get with a partner who is taking the same side you are  Write a one paragraph “defense” on your side of the issue (you must include at least 3 GOOD reasons in your defense) › Keep track of the websites you use

 Credit Card › Issued by banks, credit unions, stores, and/or gas stations › Has “ Revolving Credit ” – you can charge and pay anytime › No Payoff deadline and varied monthly payments › Has the highest interest rate

 Installment Loan › Typically used for large purchases (ex. car, appliance) › Has set monthly payments and has a payoff deadline › Lower interest rate

 Mortgage › Used specifically to purchase a home (usually) › Monthly payments are set and loan is repaid between years › Even lower interest rate (tax break on interest paid)

 Student Loan › Used for tuition and other college expenses › Usually has a grace period › Set monthly payment and payoff deadline › Has one of the lowest interest rates (tax break paid on interest)

 Good for buying purchases you could not afford if you had to pay in one lump sum (car, college, house, etc)  Good for emergencies  Credit Card incentives  Don’t have to carry so much cash – could be safer  Builds credit – your credit score tells others your responsibility in paying bills

 Temptation to overspend  Hard to keep track of what you buy  Ties up future income  Can accumulate debt by overspending, paying late fees and/or interest payments › Debt is hard on your family and your reputation

1. Retail – also known as co-branded cards ; these are store cards like Macy’s, GAP, etc. These have the highest interest rates 2. Bank Cards – Issued by a bank; examples include MasterCard, Visa, Discover, American Express 3. Reward cards – offer perks such as airline miles, a percentage back on merchandise

4. Secured Card – The amount that can be charged is prepaid; deposit is held in a special savings account and only used at the request of the customer or when account is closed. › They use this deposit if you can’t pay your bill These are for students or those who have not established credit

 Creditors target YOU!  You are constantly bombarded with credit card offers  People tend to forget that borrowed money still needs to be paid back › It’s easy to swipe a card!

Just starting out?  Get 1 credit card with a limit of $500-$1000  Pay it off (in full) every month  Borrow only what you can repay ON TIME – late fees and interest add up!  Read and understand any contract that you sign.  Remember that purchasing on credit is still something you must repay, do not get sucked into the trap of overspending.  Notify creditor if you cannot make payments.

 Using Credit comes with a price! Always compare your options – read the fine print! 1. Annual Percentage Rate (APR) Tells you the cost of the loan per year, as a percentage of the amount borrowed Introductory APR - an annual percentage rate that changes after a specific period of time 2. Credit Limit – › The maximum amount of credit a lender will extend to a customer 3. Over-the-Limit Fee › Fee for spending more than your credit limit

4. Finance Charge › Represents the actual dollar cost of using credit to maintain a balance (interest payment in a $ amount) 5. Origination Fee – › Charge for setting up a loan (usually with mortgages) 6. Loan term – › The length of time you have to pay off the loan › Excludes credit cards 7. Annual Fee – › Usually charged by credit card companies – a yearly charge your pay for the privilege of using credit

8. Grace Period › The length of time you have before you start accumulating interest › Credit cards usually give you a day grace period › Student loans give you until 6 months after you graduate 9. Late Fee › Penalty for making a payment after the due date 10. Universal Default › They hike up your interest rate if you are late for one payment