Consumer Action Families and Credit Cards American Express Families and Credit Cards A project of Consumer Action and American Express © Consumer Action 2010

Youth And Credit Cards Discussing Credit Cards With Your Children Managing Credit Card Debt Building Good Credit Credit Alternatives Training overview

Consumer Action Families and Credit Cards American Express Youth and credit cards Early discussions about how to use credit can help kids steer clear of trouble when they become adults You can teach your kids how to get the most out of credit

Consumer Action Families and Credit Cards American Express What would kids need a credit card for? Emergencies Field trips and other travel Shopping

Consumer Action Families and Credit Cards American Express Credit Yesteryear What was credit used for in your house growing up?

Consumer Action Families and Credit Cards American Express Credit card eligibility Individual credit cards are issued to people 18 years and older Your child can be an authorized user on your credit card account You (the primary cardholder) are responsible for all payments

Consumer Action Families and Credit Cards American Express Authorized users Credit card policies for authorized users (secondary accounts) vary widely:  Minimum age  Account numbers  Billing statements  Credit reporting  Responsibility  Marketing ( OPTOUT)  Debt collection

Consumer Action Families and Credit Cards American Express Discussing credit cards with your children What would your child use credit for? Teach wants vs needs Brainstorm alternatives to financing wants Set a spending limit Determine which charges your child will be responsible for paying

Consumer Action Families and Credit Cards American Express Credit and spending management tools Online access Statements Alerts Financial calculators

Consumer Action Families and Credit Cards American Express Minimum payment example Balance: $1,000 Interest Rate: 15% Minimum Payment: 3% ($30)

Consumer Action Families and Credit Cards American Express  Nine years Do you know: How long it would take to pay off a $1,000 balance if only the minimum payment was made?

Consumer Action Families and Credit Cards American Express  $576 interest  + $1,000 balance  Total payback: $1,576 Do you know: How much you would pay in interest if only the minimum payment was made?

Consumer Action Families and Credit Cards American Express What would happen if you paid an extra $10 more per month ($40 instead of $30)? Pay more than the minimum  Pay-off time would shrink to 3 years (instead of 9)  $206 in interest (instead of $576)  You’d save $370

Consumer Action Families and Credit Cards American Express Recipe for good credit A damaged credit record can affect whether you get loans, housing, even a job  Pay the bill on time.  Pay more than the minimum.  Keep outstanding balance well under credit limit.  Check for mistakes and errors in your credit report.  Get free credit report:

Consumer Action Families and Credit Cards American Express New rules to protect young adults Proof of ability to pay, or a cosigner, required for individual card applicants under age 21 Parental approval required for credit increases on cosigned card Limited card marketing on/near campus Disclosure of affinity deals between colleges and card issuers

Consumer Action Families and Credit Cards American Express Credit card alternatives Charge cards Debit cards Prepaid cards Secured cards