1 Staying on Good Terms: Credit and Debt

2 Types of Credit  Short Term/Open  Installment/Closed  Revolving

3 Beware of Predatory Lending

4 All Cards Are NOT Created Equal CCharge Card DDebit/Check Card CCredit Card SSmart Card/Cash Card

5 Cost and Benefits of Credit COSTS  A.P.R./Interest fees  Annual fees  Late payment fees  Over-the-limit fees BENEFITS  Buy/consume now, pay later  Emergencies  Establish favorable credit history

6 Ask yourself these questions:  Do I really need this item?  Is it worth it?  What interest rate am I paying?  How much is the monthly payment?  Can I afford it?  What happens if I don’t make the payments?

7 Pay as much as you can! ($3,800 Balance at 17% APR)

8 Top 10 Credit Mistakes: 1. Overspending 2. Carrying a permanent balance 3. Making only minimum payments 4. Holding too many credit cards 5. Assuming low interest rates stay the same Continue...

9 Top 10 Credit Mistakes: 6. Paying higher interest than necessary 7. Paying extra for “incentive” credit cards 8. Insisting on a no fee credit card (hidden costs) 9. Paying off the wrong credit cards first 10. Ignoring extra fees or penalties (continued)

10 Your Credit File Impacts: PPurchasing a home or renting an apartment SSeeking employment AAuto and life insurance GGetting a loan AAcquiring a cell or home phone PPurchasing a car

11 What’s In Your Credit File?  Personal Identification Information  Public Record Information  Collection Agency Account Information  Credit Account Information  Companies That Requested Your Credit File  Most negative information stays on your file 7 yrs, except for bankruptcy which can stay up to 10 yrs.

12 How to Obtain Your Credit Report  EQUIFAX:   EXPERIAN:   TRANS UNION: 

13 Credit Laws  Gives consumers the right to learn what information is in their credit file  Specifies how long information stays in a file  Clarifies how to handle disputes and verifications Continue... Fair Credit Reporting Act

14 Credit Laws  Prohibits creditors from discriminating  Requires credit grantors to notify consumers of specific reasons why they were denied credit Continue... Equal Credit Opportunity Act

15  If a card is lost or stolen, the consumer is liable for only the first $50 after written notification to the credit grantor  does NOT cover ATM and debit cards Credit Laws Continue... Truth-In-Lending

16  Sets up guidelines for the handling of disputed charges on a consumer’s bill Credit Laws Continue... Fair Credit Billing Act

17  Prohibits harassment and limits the circumstances under which collectors can attempt to collect payment  Can’t call at your workplace if you ask them not to  Can’t call your home after 9 PM  Collector must provide proof of the debt or the name and address of the original creditor if the consumer disputes the debt Credit Laws Fair Debt Collection Practices Act

18 Credit Myths  You must give your permission for a credit report to be issued  The credit reporting agency denied me credit  When paid, the bad debt will go away  I’m not responsible for debts on joint accounts or co-signed accounts if they are not my purchases

19 Staying Out of Credit Card Trouble  If possible pay off entire credit card bill every month  Don’t charge perishable items because you will be paying for them long after they are gone  Limit the number of credit cards you have  Shop for the credit card with the best terms

20 Signs of Credit Trouble  Charge credit cards to the limit  Make just the minimum monthly payments  Use one card to pay for another  Do not know your total debt  Borrow from family members to pay debt Continue...

21 Signs of Credit Trouble  Afraid to open your credit card statements  Have little or no savings  Using cash advances  Dread answering phone (continued)

22 Debt Recovery Suggestions  Bump up your monthly payments  Increase your income  Distinguish between wants and needs  Limit credit card use  Delay gratification  Budget  Use cash  Talk to your creditors if you have a problem  Seek advice - CCCS: CCCS

23 Pay Off Your Credit Card Quicker  Pay off the credit card with the highest interest rate first  Pay more than the minimum payment every month

24 Talking to Your Creditor  Ask them to lower your interest rate  Ask them to lower your credit limit  Ask them to change when your bill is due  Discuss your situation with them and set up a payment plan

25 Consumer Credit Counseling Services  Budget Counseling  Debt Repayment Plan –you agree to not use the cards –pre-arranged agreement with creditor(s) for reduced payment and interest in some cases –you pay CCCS and they pay your creditors –CCCS will not put the repayment plan on your credit report BUT creditors may

26 Do’s and Don’ts Do:  Store your credit cards in a safe place  Notify your creditors if you can’t make your payments on time  Track your expenses  Order a copy of your credit file regularly Don’t:  Charge more than you can pay back on a monthly basis  Buy on impulse - delay gratification  Use one card to pay another  Buy items like groceries  Pay just the minimum payment

27 For Individual Help Contact: Consumer Credit Counseling Service (referral #017)