The Use of Credit. Credit Credit is when money, goods, services are received with the promise to pay back in the future 3,000 yrs ago in Iraq.

Slides:

Advertisements

Similar presentations

Credit Buy Now, Pay Later. Credit Someone is willing to loan you money (principal) in exchange for your promise to pay it back, usually with interest.

Advertisements

CREDIT Chapter 16.

Chapter 6: Credit Use and Credit Cards. Objectives Compare and contrast installment and non-installment credit and discuss the costs of credit. Discuss.

Introduction to Business & marketing

© 2012 Cengage Learning. All Rights Reserved. Principles of Business, 8e C H A P T E R 18 SLIDE Credit Fundamentals Cost of Credit.

Understanding Loans and Borrowing Money. Development of Credit  In the Past  Credit Today.

In Unit 4 we will see the importance of using and managing credit effectively in the financial planning process.

Credit Cards. CREDIT DEFINITIONS Credit Trust given to another person for future payment of a loan, credit card balance, etc. Creditor A person or company.

Taking charge of your finances Credit. Taking charge of your finances Today’s goal The 5 C’s of credit. Installment vs. non-installment credit. Advantages.

CREDIT. ADVANTAGES OF CREDIT advantages: o Able to buy needed items now o Don’t have to carry cash o Creates a record of purchases o More convenient than.

Credit and Its Use.

Personal Finance Chapter 16

Credit You're in Charge What is Credit ??? Credit is an arrangement to Receive cash, goods, or services now and pay for them in the future!

Bellwork When do you think it is appropriate to use a credit card?

Credit Use and Credit Cards. Objectives Compare and contrast installment and non-installment credit and discuss the costs of credit. Discuss reasons for.

1 Those Darned Cards!. 2 Chapter 6 – Credit Cards Extremely important but deceptively expensive Revolving – borrow, repay then reborrow Minimum repayment.

Credit Card Review. Some credit card companies charge ________ fees for the use of their card.

Chapter 6: Credit Use and Credit Cards. Objectives Compare and contrast installment and non-installment credit and discuss the costs of credit. Discuss.

Credit Intro to Credit & Establishing Good Credit.

Dealing the Cards of Credit Credit cards No set time to be paid back May pay in full, part, or minimum payment No finance charge if bill paid in full.

Credit Wisdom. Managing Money & Credit: A Lifelong Skill.

Personal Finance Spring  Allows the user to buy goods based on the promise that they will later pay for the goods  Issuers give users access to.

Credit. Bell Ringer 1.Is a credit card good or bad? 2.What would be considered good credit? 3.On average how many credit cards does the average household.

Credit Cards Adult Living. Advantages of using credit It’s convenient. You don’t have to carry large amounts of cash and you don’t have to go through.

Card A. Risk 12/ Lance L. Lancer12/12 Credit: History, Types, Dangers Chapter 10.

Understanding a Credit Card Take Charge of Your Finances.

Credit Cards The Essentials to Take Charge of Your Finances In your opinion, do consumers spend more per month on average when they use a credit.

Credit: History, Types, Dangers

+ Credit in America Chapter 16 Credit Management Unit 4.

Key Terms Section 10.1 & 10.2  Why should you be careful not to take on more debt than you can easily repay? *Credit *Equity *Creditworthiness *Character.

Credit Use and Credit Cards Steven M. Hays BKHS – Personal Finance Steven M. Hays BKHS – Personal Finance.

USING CREDIT. Managing Money & Credit: A Lifelong Skill.

Chapter 16 Credit in America

Credit. What is credit? Borrowing $ to use today, with the promise to repay in the future.

© Take Charge Today – August 2013 – Understanding Credit Cards – Slide 1 Funded by a grant from Take Charge America, Inc. to the Norton School of Family.

INTRODUCTION TO BUSINESS & MARKETING CREDIT. Objectives Compare the types of consumer credit Describe the advantages and disadvantages of using credit.

Buy Now Pay Later….  How to analyze the advantages & disadvantages of consumer credit  How to distinguish among various types of consumer credit  How.

CREDIT CARDS. Advantage/Disadvantages Your Credit Worthiness The 5 ‘Cs’ Capacity Character Credit History Capital Collateral The 5 ‘Cs’ Capacity Character.

Chapter 4.  What is Credit? ◦ Principal + Interest  Installment Debt ◦ Equal Payments ◦ Durable Goods ◦ Longer Term = Lower Payment BUT ◦ More Interest.

Chapter © 2010 South-Western, Cengage Learning Credit in America Credit: What and Why Types and Sources of Credit 16.

Chapter 10 What is Credit? The ability to Giving up.

Introduction to Business © Thomson South-Western ChapterChapter Consumer Credit Credit Fundamentals Cost of Credit Credit Application.

College lesson four about credit.

Credit, Credit Cards, Scores and Compound Interest Today, you will need: Spirals, writing utensils, brains. Please, and thank you.

Chapter 6: Credit Use and Credit Cards. Objectives Compare and contrast installment and non-installment credit and discuss the costs of credit. Discuss.

UNIT FIVE. CREDIT: BUY NOW, PAY LATER. Coming soon to a mailbox near you: Credit Card offers.

Credit In your opinion, do consumers spend more per month on average when they use a credit card or cash?

Family Economics & Financial Education 4.1.G1 © Family Economics & Financial Education – Revised October 2004 – Credit Unit – Selecting a Credit Card Funded.

Jeopardy Begins with c Loans Poor credit Consumer Credit consumer Finance Q $100 Q $200 Q $300 Q $400 Q $500 Q $100 Q $200 Q $300 Q $400 Q $500 Final.

Teens Credit- Day 3 Independent Living December 2, /09.

Credit – You’re in Charge.  Credit – the ability to borrow money in return for a promise of future payment. ◦ Credit has the opposite trade-off as saving.

Understanding a Credit Card Take Charge of Your Finances

Credit. credit is money loaned in exchange for your promise to pay it back later with interest. interest is a amount of money paid to use someone else’s.

Teens lesson seven credit presentation slides 04/09.

Credit: “confidence in a purchaser's ability and intention to pay, displayed by entrusting the buyer with goods or services without immediate payment.”

Objective 5.01 Credit Management 1. Topics Main types of credit Common advantages and disadvantages of businesses using credit Cost of credit Main factors.

Credit Cards are a part of most American’s lives, but if you don’t know how to use them, they can really make your life more difficult Credit cards don’t.

Chapter 16 Credit in America  What Is Credit?  Types and Sources of Credit.

Using Credit Wisely. Credit  Credit is a sum of money a person can use before having to reimburse the credit lender.  It allows a person to receive.

Personal Finance 7.02 Credit Ratings. CREDIT DEFINITIONS Credit Trust given to another person for future payment of a loan, credit card balance, etc.

Credit Test Review. What card takes money directly from your checking or savings account?  Debit Card.

Objective 5.01 Credit Management 1. Topics Main types of credit Common advantages and disadvantages of businesses using credit Cost of credit Main factors.

CREDIT: BUY NOW, PAY LATER. It’s important for all of us to establish good credit. 28% of students with a credit card don’t repay the entire balance off.

Consumer Economics Credit Credit Investing Investing.

Intro to Business, 7e © 2009 South-Western, Cengage Learning SLIDE1 CHAPTER Credit Fundamentals Cost of Credit Credit Application.

Key Terms Section 10.1 & 10.2  Why should you be careful not to take on more debt than you can easily repay? *Credit *Equity *Creditworthiness *Character.

Credit Basics Consumers Math.

Presentation transcript:

The Use of Credit

Credit Credit is when money, goods, services are received with the promise to pay back in the future 3,000 yrs ago in Iraq

Credit Keys Interest Fees Types Open-ended credit (revolving credit, line of credit) Closed-end credit (installment credit)

Advantages of Using Credit 1. Convenience 2. Used in times of emergencies 3. Good form of identification 4. Purchase expensive items soon 5. Higher standard of living than can afford right now (higher income in future) 6. Take advantage of free credit 7. Debt-consolidation: one payment 8. Pay back other debt that has higher interest rates

Disadvantages of Using Credit 1. Interest (the price of credit) is costly 2. Additional fees are common (ATM fees, annual fees) 3. Tempting to overspend 4. Privacy & identity theft is a concern 5. Reduces spending flexibility

Cost of Credit Annual Percentage Rate (APR) The cost of credit on a yearly basis Mandated by law to be publicized – best way to compare options Often charged monthly: 1.5% per month (periodic rate) = 18% per year

Cost of Credit Basis for Monthly Charges Usually use average daily balance (p. 204) Grace period? New purchases? Minimum payments for open-end Often just barely higher than the finance charge Large penalties if do not pay Read “Advice from a Pro…” (p. 205) Sample closed-end (p. 210)

Cost of Credit Annual Percentage Rate (APR) You charge $100 on your credit card with a 24% APR.  What is your yearly finance charge?  What is your first month’s finance charge?  If you pay $25.00 on your first month payment, what is your balance the second month?

APR Practice 1. You decide to purchase a $700 plane ticket for your Spring Break vacation on your credit card. Your card charges 15% APR. What is the annual finance charge? What is your first month finance charge? 2a.William spends $200 on his Visa card. If he leaves this on his card that charges 18% APR, what is his first month finance charge? 2b. Calculate the remaining balance at the end of the month if he pays $25.

Bellringer - APR Practice a.William spends $500 on his Visa to buy things for his new apartment. If he leaves this on his credit card that charges 18% APR, what is his first month’s finance charge (interest)? b. Calculate the remaining balance at the end of the month if he pays $75. c. After this payment, what would be his second month’s finance charge? Tues, Apr 16

Credit Vocabulary (Ch.’s 6 & 7) credit historydefault creditgrace period introductory rateannual fees APR credit limit cash advanceperiodic rate finance chargeminimum payment average daily balanceclosed end credit credit scoreopen end credit

Applying for Credit: the Six C’s Character: Will you repay your loan? Capital: What are your assets and net worth. Capacity: Will you be able to pay your loan? Collateral: What if you are unable to pay back your loan? Conditions: Current market conditions Credit History Have you used credit responsibly in the past?

Credit Scores (FICO) Range from 340 – 850 Dependent on 5 key factors (p. 177) Kept by 3 different organizations Should be checked regularly – can get a free copy of your report (not your score) once a year

Managing and Protecting Your Credit Regular FICO scores checks Errors Stolen Identity – very messy Be careful on internet Many consumer credit protection laws Truth in Lending Act Equal Credit Opportunity Act Fair Credit Opportunity Act Fair Credit Reporting act Consumer Credit Reporting Reform Act

Debt Problems Collection Agencies Financial Counseling Services Bankruptcy “Chapter 7”  straight bankruptcy (liquidation) “Chapter 13”  wage earner bankruptcy (reorganization) “Chapter 11”  Corporate bankruptcy (reorganization)