SCHOOL EMPLOYEES CREDIT UNION OF WASHINGTON FINANCIAL MANAGEMENT 101 M oney t alks FINANCIAL MANAGEMENT 101 credit But Good

SCHOOL EMPLOYEES CREDIT UNION OF WASHINGTON FINANCIAL MANAGEMENT 101 Introduction The advantages and pitfalls of Checking Accounts, Debit Cards, Credit Cards and Payday Loans. The importance of maintaining good credit and the role of Credit Reports. Protecting against Identity Theft.

SCHOOL EMPLOYEES CREDIT UNION OF WASHINGTON FINANCIAL MANAGEMENT 101 How checks work “Holds” can be placed on deposits Keeping track of transactions NSF checks are costly! Checking Accounts

SCHOOL EMPLOYEES CREDIT UNION OF WASHINGTON FINANCIAL MANAGEMENT 101 You write a check at Safeway for $12, but you only have $6 in your checking account. Your Bank charges you a $25 NSF fee and notifies Safeway. Safeway tries to submit the check again. (A check can be submitted three times by the retailer.) You get another $25 NSF fee from your Bank. Safeway now charges you a “Returned Check” fee of $20. NSF checks are costly! Checking Accounts $12 + $20 (Safeway) and $25 + $25 (Your Bank) Do the Math:

SCHOOL EMPLOYEES CREDIT UNION OF WASHINGTON FINANCIAL MANAGEMENT 101 NSF checks are costly! (cont’d) Checking Accounts And, your troubles may not be over... You now owe $32 to Safeway and $50 to your Bank! Now, you could owe $112 for a check you wrote for $12 ! If you don’t take care of it right away, a Collection Agency can get involved. They will also charge a fee ($30 and up.)

SCHOOL EMPLOYEES CREDIT UNION OF WASHINGTON FINANCIAL MANAGEMENT 101 –Pay attention to your checking account. Always know how much you have in your account. 1.When you make a mistake (many people occasionally overdraw their account), immediately contact both the retailer and your bank. 2.Find out what kind of “Overdraft Loan” is offered by your bank or credit union. Depending on how much they charge for this service, it could save you a lot of money. Shop around for the best rates. –Use a Debit Card D ebit card transactions, once approved, will always clear your account and cannot be sent back. There can be no NSF fees with an approved debit card transaction. Checking Accounts

SCHOOL EMPLOYEES CREDIT UNION OF WASHINGTON FINANCIAL MANAGEMENT 101 DEBIT Cards t DEBIT Cards typically have a or logo It’s important to keep track of your spending! It’s important to keep track of your spending! Directly tied to your checking account. Debit cards can be used for both PIN and signature transactions (retail/gas purchases, ATMs, etc.). Debit Cards

SCHOOL EMPLOYEES CREDIT UNION OF WASHINGTON FINANCIAL MANAGEMENT 101 ATM Cards Remember: Keep track of your spending! ATM cards can be used anywhere you can use a PIN (retail/gas purchases, ATMs, etc.) ATM Cards are typically tied to a Savings Account ATM Card Use: ATMs, at some stores, can be confusing: Do you select Debit or Credit ?

SCHOOL EMPLOYEES CREDIT UNION OF WASHINGTON FINANCIAL MANAGEMENT 101 Credit Cards Disadvantages Leading cause of financial difficulties. APR can be very high; hidden fees. “Buy Now, Pay Later” can severely test your self discipline. Note: Anyone under 21 must prove they have the means to pay or have the account co-signed by parent/guardian.

SCHOOL EMPLOYEES CREDIT UNION OF WASHINGTON FINANCIAL MANAGEMENT 101 Credit Cards Advantages Convenience -- accepted almost anywhere Shop by phone or Internet Emergencies Purchase Protection Can help establish credit history

SCHOOL EMPLOYEES CREDIT UNION OF WASHINGTON FINANCIAL MANAGEMENT 101 What are they? What information is on them? (Your credit report is similar to your high school transcript.) How are they used? What is a credit score? Importance of maintaining good credit: –Loan APR –Renting an apartment –Buying a car/home –Purchasing a cell phone, etc. –Getting a job Credit reports

SCHOOL EMPLOYEES CREDIT UNION OF WASHINGTON FINANCIAL MANAGEMENT 101 Credit card payoff 9.36% 21.00% Starting Balance $3,000 $3,000 Payoff Time 11 years, 3 months39 years, 2 months Total Payments$4, $16, Both cards require a minimum payment of 2% of the outstanding balance or $25, whichever is greater. Difference in payoff of a $3,000 balance at 9.36% vs % (if you only make minimum payments)

SCHOOL EMPLOYEES CREDIT UNION OF WASHINGTON FINANCIAL MANAGEMENT 101 EXAMPLE : $15,000 Loan Installment Loans Interest Rate: 3.24% Payments:60 Total of Payments:$16, Interest Rate: 18% Payments:60 Total of Payments:$22,864.59

SCHOOL EMPLOYEES CREDIT UNION OF WASHINGTON FINANCIAL MANAGEMENT 101 How they work Pros Cons Pay Day loans are relatively simple and easy to get, especially if you only need the money for a short time. These loans are relatively high risk to the lender, so the lender charges a high APR to offset that risk. Let’s take a look at some examples… Pay Day Loans

SCHOOL EMPLOYEES CREDIT UNION OF WASHINGTON FINANCIAL MANAGEMENT 101 EXAMPLE #1: $500 Loan You give your postdated check to the Pay Day lender. They give you $500. On payday, the lender cashes your check. It costs you $75 to borrow $500 for two weeks! Pay Day Loans Let’s say, you need (or want) $500 …like, NOW! You know you’ll get paid soon (less than 2 weeks). So… You write a personal check for $575 – postdated for your payday.

SCHOOL EMPLOYEES CREDIT UNION OF WASHINGTON FINANCIAL MANAGEMENT 101 Let’s say you need to replace a tire on your car and Mom and Dad won’t pay for it. It will cost you about $100. What would be the “cheapest” way for you to purchase the tire? Pay Day Loan? Credit Card? Personal Loan? Share Secured Loan? Pay Day Loan vs. Other Loan Options 392% 15 – 21% 10 – 15% 4% Pay Day Loans

SCHOOL EMPLOYEES CREDIT UNION OF WASHINGTON FINANCIAL MANAGEMENT 101 Birth Date SS# Driver’s License # Mother’s Maiden Name Address GOLDEN INFORMATION Protect your “GOLDEN INFORMATION” Golden Information Cause of Identity Theft for teens is personal theft of “Golden Information” by a roommate, boy/girlfriend, or family member. Identity Theft Identity Theft #1

SCHOOL EMPLOYEES CREDIT UNION OF WASHINGTON FINANCIAL MANAGEMENT 101 Shred personal documents when done with them. Get e-Statements -- instead of paper. Always shred credit card offers. Beware of scams ( , phone, etc.). Check your credit report (annualcreditreport.com) Ramifications of Identity Theft: –Credit report will not be accurate –Long and costly process to rectify –Could adversely affect ability to get loans, apartment, job, etc. Identity Theft Identity Theft