The National Economics Department Financial Freedom Campaign NAACP The National Economics Department Financial Freedom Campaign NAACP

Agenda Banking Basics Borrowing Basics Budgeting Basics Saving Basics Credit Basics Financial Recovery Consumer Rights Resources

Banking Basics Requirements for opening an account – Opening Deposit You'll usually need at least $1 to open an account, but some banks will require a higher amount, such as $100, $500, or more, depending on the type of checking account you want. – Identification Acceptable identification includes: Your Social Security number Tax identification number Permanent resident card Driver's license or state identification card If you are opening a U.S. bank account and are not a U.S. resident, you'll need at least one and probably two of the following: Foreign passport with photo Foreign driver's license, nonimmigrant Visa and border crossing card (DSP-150 with photo),Visa nonresident alien border crossing card (I-586 with photo) – Contact Information This will include your address, phone number and address.

Guide To Financial Institutions InstitutionsOverview Banks They offer small business loans, consumer loans, including mortgages, as well as credit cards, deposit products and checking accounts for everyone. Banks can now offer insurance and investment products such as mutual funds and IRAs. Many banks also offer trust services, estate planning and asset management Thrifts Today's thrifts offer checking accounts and provide business and consumer loans as well as mortgages. Thrifts can be owned by their shareholders (stock ownership) or by their depositors (mutual ownership).

Guide to Financial Intuitions Cont. InstitutionsOverview Credit Unions Are nonprofit, cooperative financial institutions Many credit unions simply require that you live or work in a certain geographic area in order to become a member Credit unions frequently offer higher interest on deposit products than banks or thrifts; and they have a tendency to offer loans at lower rates. Credit unions are exempt from federal taxation. Online Banks Do not have physical locations, but first gained attention by offering higher rates on deposit products than traditional banks. The FDIC warns that not all banks operating on the Internet are insured by the FDIC.

Why Use An FDIC Insured Banking Institution? Your money is protected by the FDIC (up to $250,000) Security Located in a central place that can be accessed from anywhere Convenience Opportunity to take advantage the stock market or earn interest on deposits Saving & Investing

Borrowing Basics Interest: The Cost of Borrowing Money Avoid Alternative Finance Services (i.e. Payday loans, Car Title Loans, etc) – Usually charge higher fees for products/services – Not considered to be credit building institution(s)

Know the FACTS Pros Credit Costs $$$Credit =TemptationEasy to lose track Cons

The Golden Rule of Money When you use someone else’s money you have to pay for it! Most of the time that payment is in the form of INTEREST!!!! The Golden Rule of Money When you use someone else’s money you have to pay for it! Most of the time that payment is in the form of INTEREST!!!!

Line of Credit V.S. Loan Line of Credit A line of credit works like a credit card in the sense that you have a credit limit and can borrow as needed and pay at least a minimum payment based on your balance. Loan A loan usually refers to borrowing a fixed amount at one time and paying a set amount each month for the term of the loan.

Types of Credit Revolving Credit: Allows you to borrow money at any time up to a set limit. The most common types are credit cards. Installment Credit: A loan that must be repaid over a specific period of time. This type of credit is common for larger purchases such as a home, car, or education. Non-installment or Service Credit: Allows you to pay for a used service at a later date usually without an interest charge. (i.e. A utility bill)

Types of Credit Continued Secured Credit: Requires you to provide something of value to guarantee that you will repay your debt. It is usually used for installment loans. If you fail to repay, the lender takes your item as repayment Unsecured Credit: Does not require a guarantee (collateral) Secured Credit: Requires you to provide something of value to guarantee that you will repay your debt. It is usually used for installment loans. If you fail to repay, the lender takes your item as repayment Unsecured Credit: Does not require a guarantee (collateral)

Budgeting Basics Track daily spending habits Prepare a personal spending plan or budget to estimate monthly income and expenses Identify ways to decrease spending Identify possible ways to increase income Identify budgeting tools that will help you manage your bills List and prioritize financial goals Recognize how to create a plan to achieve financial goals

Financial Goal Setting: The 5 Steps 1. Set and write down your financial goals 2. Breakdown the goals into bite- size chunks 3. Create a detailed plan of action 4. Grow your financial knowledge 5. Evaluate progress Financial Goal Setting: The 5 Steps 1. Set and write down your financial goals 2. Breakdown the goals into bite- size chunks 3. Create a detailed plan of action 4. Grow your financial knowledge 5. Evaluate progress Setting Financial Goals

Saving Basics Explain why it's important to save. Determine goals toward which you want to save. Identify savings options. Determine which savings options will help you reach your savings goals. Recognize investment options that will work for you. List ways you could save for retirement. List ways to save for large-expense goals, including child’s college tuition, car or home purchase, or a vacation.

 Credit: Money you borrow and plan to repay. It allows you to make a purchase without having to pay the entire price at once.  Interest: Is the cost of borrowing money. Credit Basics

U.S. Credit System Public RecordsCreditors Collection Agencies Credit Bureaus/Inquiries Data Furnishers TransUnionEquifax Experian

The FICO Score: Factors that influence credit 35% 35% Payment History 30% 30% Amounts Owed 15% 15% Length of Credit History 10% 10% New Credit 10% 10% Type of Credit in Use

Want GOOD Credit??? Tip 1: Pay your bills on time Tip 2: Contact your lenders immediately if you foresee a payment problem Tip 3: Borrow at a minimum Tip 4: Do not overdraft accounts Tip 5: Understand loan terms/agreements before signing

The Credit Report: Explored Information typically included: Indentifying Information – Name, Address, Social Credit Information – Dates opened, credit limits Public Record Information – Bankruptcy, Foreclosures Inquiries – Others who looked at report Indentifying Information – Name, Address, Social Credit Information – Dates opened, credit limits Public Record Information – Bankruptcy, Foreclosures Inquiries – Others who looked at report Common errors on the report Duplicate Information Uninvited Inquiries Items that should no longer be listed on your credit report

The Credit Report: Explored Credit Report: A record of how you have paid your credit card debt and other loans. It reflects the following: – How much debt you have – If you’ve made your payments on time – Whether or not you’ve paid back your loans Credit Report: A record of how you have paid your credit card debt and other loans. It reflects the following: – How much debt you have – If you’ve made your payments on time – Whether or not you’ve paid back your loans

The Credit Report: Explored Credit reports are complied by national credit reporting agencies called credit bureaus There are three Credit Bureaus: – TransUnion – Equifax – Experian

Financial Recovery Tips  Assess your current financial situation  Identify ways to increase income and decrease and prioritize expenses  Develop a financial recovery plan  Identify steps to successfully implement a financial recovery plan  Recognize how to guard against credit repair scams  Identify timeframes to review and adjust your financial recovery plan.

Financial Recovery Plan

Recognizing Credit Repair Scams

Each of the nationwide consumer reporting companies Equifax, Experian, and TransUnion — is required to provide you with a free copy of your credit report once every 12 months, if you ask for it. Each of the nationwide consumer reporting companies Equifax, Experian, and TransUnion — is required to provide you with a free copy of your credit report once every 12 months, if you ask for it. It doesn’t cost anything to dispute mistakes or outdated items on your credit report. It doesn’t cost anything to dispute mistakes or outdated items on your credit report. No one can legally remove accurate and timely negative information from a credit report No one can legally remove accurate and timely negative information from a credit report Each of the nationwide consumer reporting companies Equifax, Experian, and TransUnion — is required to provide you with a free copy of your credit report once every 12 months, if you ask for it. Each of the nationwide consumer reporting companies Equifax, Experian, and TransUnion — is required to provide you with a free copy of your credit report once every 12 months, if you ask for it. It doesn’t cost anything to dispute mistakes or outdated items on your credit report. It doesn’t cost anything to dispute mistakes or outdated items on your credit report. No one can legally remove accurate and timely negative information from a credit report No one can legally remove accurate and timely negative information from a credit report Consumer Rights

Resources Annual Credit Report: Experian: Equifax: TransUnion: National Foundation For Credit Counseling: Federal Trade Commission: Choosing a Credit Counselor Department of Justice: List of Credit Counseling Agencies- Better Business Bureau: See if there are any alerts on the organization you are considering Association of Independent Consumer Credit Counseling Agencies: