Credit Cards & Credit Ratings Mr. Raposo/Mr Schoenhardt KCSS

Learning Goals We are listing the pros/cons of credit We are listing the pros/cons of credit We are describing how to apply for and obtain credit We are describing how to apply for and obtain credit Success Criteria: I can explain how to maintain a good credit rating I can explain how to maintain a good credit rating I explain the advantages/disadvantages of credit I explain the advantages/disadvantages of credit

Game Plan Chapter 15: Credit PPT notes (15 min) Chapter 15: Credit PPT notes (15 min) Video: In Debt We Trust (35 min) Video: In Debt We Trust (35 min) Handout: The 3 C’s of credit and applying for credit (20 min) Handout: The 3 C’s of credit and applying for credit (20 min)

Overview What is a credit rating? What is a credit rating? How do you establish a credit card? How do you establish a credit card? Good uses of credit Good uses of credit Poor uses of credit Poor uses of credit Signs of money problems Signs of money problems

What is a credit rating? A credit rating is your reputation for paying back loans and other money you owe (credit cards) A credit rating is your reputation for paying back loans and other money you owe (credit cards) You need a good credit rating to : Obtain a loan Obtain a loan Rent apartments Rent apartments Obtain a higher limit on your credit card Obtain a higher limit on your credit card

How do you establish a credit rating? Get a credit card Get a credit card Get a phone in your name Get a phone in your name Student loan (and paying it off) Student loan (and paying it off) Borrow only what you need and can afford Borrow only what you need and can afford Pay off loans quickly and on time Pay off loans quickly and on time

Good Uses of Credit Home mortgage (a loan to buy a home) Home mortgage (a loan to buy a home) Automobile Automobile Purchase of an item that will last longer than the period of debt incurred to buy it Purchase of an item that will last longer than the period of debt incurred to buy it For safety and convenience For safety and convenience To take advantage of credit card features such as guarantees and insurance To take advantage of credit card features such as guarantees and insurance When the purchase is a necessity not a luxury When the purchase is a necessity not a luxury

Poor Uses of Credit Tempted to overspend Tempted to overspend Impulse purchases Impulse purchases Unnecessary items Unnecessary items When you cannot pay for your existing credit card balances When you cannot pay for your existing credit card balances

Signs of Money Problems Spending money makes you feel good Spending money makes you feel good Living paycheck to paycheck Living paycheck to paycheck Frequently borrowing small amounts Frequently borrowing small amounts Interest charges on credit card bill Interest charges on credit card bill Having no idea how much you owe Having no idea how much you owe Never saving a dime Never saving a dime

Improving your spending Keep good records and receipts Keep good records and receipts Avoid impulse shopping Avoid impulse shopping Take credit seriously Take credit seriously Make a shopping list Make a shopping list Pay cash or debit Pay cash or debit Buy private or generic products (instead of expensive name brands) Buy private or generic products (instead of expensive name brands)

Advantages/Disadvantages of Consumer Credit Refer to handout from class Refer to handout from class