IL Credit Unit Spring 2014

March 19, 2015 Early Work: How do you obtain a credit report? Schedule –Pre Test –Credit notes Target: Understand the risks of using credit.

Advantages of Credit --Able to buy needed items now --Don’t have to carry cash --Creates a record of purchases --More convenient than writing checks --Consolidates bills into one payment

Disadvantages of Credit --Interest (higher cost of items) --May require additional fees --Financial difficulties may arise if one loses track of how much has been spent each month --Increased impulse buying may occur

The Three C’s of Credit

Character Will You Repay the Debt? ---From your credit history, does it look like you possess the honesty and reliability to pay credit debts? ---Have you used credit before? ---Do you pay your bills on time? ---Do you have a good credit report? ---Can you provide character references? ---How long have you lived at your present address? ---How long have you been at your present job?

Capital What if you Don’t Repay the Debt? ----Do you have any valuable assets such as real estate, savings, or investments that could be used to repay credit debts if income is unavailable? ---What property do you own that can secure the loan? ---Do you have a savings account? -----Do you have investments to use as collateral?

Capacity Can you Repay the Debt? ---Have you been working regularly in an occupation that is likely to provide enough income to support your credit use? ---Do you have a steady job? What is your salary? ---How many other loan payments do you have? ---What are your current living expenses? What are your current debts? ---How many dependents do you have?

Test Your Credit Knowledge For each statement choose: –A - Character –B - Capital –C - Capacity

Credit “Test” 1.Do you have a savings account? 2.Have you used credit before? 3.How long have you lived at your present address? 4.Do you have a steady job? 5.Do you pay your bills on time? 6.What are your current debts and current living expenses?

Answers/Discussion 1.Do you have a savings account? B - Capital 2.Have you used credit before? A - Character 3.How long have you lived at your present address? A - Character 4.Do you have a steady job? C - Capacity 5.Do you pay your bills on time? A - Character 6.What are your current debts and current living expenses? C - Capacity

Your Responsibilities Borrow only what you can repay. Read and understand the credit contract. Pay debts promptly. Notify creditor if you cannot meet payments. Report lost or stolen credit cards promptly. Never give your card number over the phone unless you initiated the call or are certain of the caller’s identity.

Your Rights Truth in Lending Act (1968) –Ensures consumers are fully informed about cost and conditions of borrowing. Fair Credit Reporting Act (1974) –Protects the privacy and accuracy of information in a credit check. Equal Opportunity Act (1974) –Prohibits discrimination in giving credit on the basis of sex, race, color, religion, national origin, marital status, age, or receipt of public assistance.

March 20, 2015 Early Work: What can you do to build a good credit history? Schedule Finish Credit Notes Chapter 10 Target: Demonstrate an understanding of how to use credit.

Your Rights Fair Credit Billing Act (1974) –Sets up a procedure for the quick correction of mistakes that appear on consumer credit accounts. Fair Debt Collection Practices Act (1977) –Prevents abuse by professional debt collectors and applies to anyone employed to collect debts owed to others: does not apply to banks or other businesses collecting their own accounts.

Test Your Knowledge Consumer Rights and Responsibilities Choose True or False for each of the following statements.

Test Your Knowledge: Consumer Rights and Responsibilities (True or False) 1.It is legal for a creditor to deny an applicant credit based on marital status or age. 2.If you are denied credit, the creditor is not legally obligated to explain why. 3.When creditors evaluate your income, they can’t legally refuse to consider income from public assistance in the same manner as other income. 4.If you are refused credit because of a credit report, upon request from you, the lender must give you the name and address of the credit bureau that issued the report.

Test Your Knowledge: Consumer Rights and Responsibilities (True or False) 5.Your credit report is available to anyone, regardless of the reason. 6.A debt collector has the right to contact you at any time of day or night.

Test Your Knowledge: Answers 1.It is legal for a creditor to deny an applicant credit based on marital status or age. False 2.If you are denied credit, the creditor is not legally obligated to explain why. False 3.When creditors evaluate your income, they can’t legally refuse to consider income from public assistance in the same manner as other income. True 4.If you are refused credit because of a credit report, upon request from you, the lender must give you the name and address of the credit bureau that issued the report True

Test Your Knowledge: Answers 5. Your credit report is available to anyone, regardless of the reason. –False 6.A debt collector has the right to contact you at any time of day or night. False

Building a Credit History Establish a steady work record. Pay all bills promptly. Open a checking account and don’t bounce checks. Open a savings account and make regular deposits. Apply for a local store credit card and make monthly payments. Apply for a small loan using your savings account as collateral. Get a co-signer on a loan and pay back the loan as agreed.

A Credit Report 1.What a Credit Report covers and what it looks like. Identification and employment data Payment History Inquiries Public Record Information

A Credit Report 2.Credit scoring, manner of payment codes 30, 60, and 90 + days late, days late.. Look a the credit report using the 3 C’s 3.What do you do if you have a bad credit report? Time A consumer reporting agency can report poor credit info for up to 7 years and a bankruptcy for up to 10 years. Establish Good Credit Add a statement of explanation

A Credit Report 4.What if there is inaccurate information reported? Contact the credit bureau. Under the law, the credit bureau must investigate your report.

Reading a Credit Report

Teens – Lesson 7 - Slide 7- F

Types and Sources of Credit Single-Payment Credit –Items and services are paid for in a single payment, within a given time period, after the purchase. –Interest is usually not charged. Example: –Utility companies –Medical Services –Some Retail Businesses

Types and Sources of Credit Installment Credit –Merchandise and services are paid for in two or more regularly scheduled payments of a set amount. –Interest is included. This is usually called a loan. Money may also be loaned for a special purpose, with the consumer agreeing to repay the debt in two or more regularly schedule payments. These loans come from: –Some retail companies (buying a car or appliances, etc.) –Banks –Finance Companies –Credit Unions, etc.

Types and Sources of Credit Revolving Credit –Many items can be bought using this plan as long as the total amount does not go over the credit user’s assigned dollar limit. –Repayment is made at regular time intervals for any amount at or above the minimum required amount. –Interest is charged on the remaining balance. A Credit Card is an example of Revolving Credit Where can you get Revolving Credit? –Retail stores –Financial institutions that issue credit cards

Test Your Credit Knowledge (5 questions) Identify the Type of Credit: –A - Single-payment credit –B - Installment credit –C - Revolving credit 1.Monthly payment on a car loan 2.Monthly telephone bill 3.Monthly heating bill 4.Using a credit card to buy a new jacket from a department store and then paying the charge off over several months 5.Using a major credit card to buy a pair of shoes and then paying the total amount of the credit card balance within a month

Test Your Credit Knowledge 1.Monthly payment on a car loan B) Installment Credit 2.Monthly telephone bill A) Single-payment credit 3.Monthly heating bill A) Single-payment credit 4.Using a credit card to buy a new jacket from a department store and then paying the charge off over several months C) Revolving credit 5.Using a major credit card to buy a pair of shoes and then paying the total amount of the credit card balance within a month A) Single-payment credit

Credit Terms and Vocab Complete Worksheet

March 23, 2015 Early Work: How do you currently save money? Schedule Investment groups Target: Research and Summarize a given investment option looking at advantages and disadvantages.

Investment Group Project Assignment: Imagine your team is working for an investment firm. You are in a competition with other teams in your office to sell the most product. Your job is to sell your product by creating a Google Docs or powerpoint presentation that your salesmen can share with your clients and promote as the best option. Remember: your firm will be sued if you falsify any information or deceive your investors.

Groups: 1: Savings accounts/CD’s- Absent students 2: Bonds (all types) 3: Stocks 4: Mutual Funds 5: Real Estate 6: Retirement Plans (Pension, IRA) 7: Money Market account

Must Include -Description -Types of investments -Income potential -Benefits/Advantages -Risks/Disadvantages -Real life Example

March 24, 2015 Early Work: What is the rate of return for your assigned investment Schedule –Work on Investment options –Due on Thursday (Some class time if necessary) Target: Understand investment options

Groups: 1: Savings accounts and CD’s: Elidio 2: Bonds: Brennan 3: Stocks and Mutual Funds: Erin, Miles 4: Real Estate- Maddy and Kadie, laura 5: Retirement Plans- Tara and Amber 6: Money Market account: Taylor, Wyatt

Must Include -Description -Types of investments -Income potential -Benefits/Advantages -Risks/Disadvantages -Real life Example

March 26, 2015 Early Work: How much money is typically invested with your option Schedule –Presentations on Investment options with notes Target: Understand investment Risks and benefits

March 27, 2015 Early Work: What is the benefit of your investment option? Schedule –Finish Presentations on Investment options with notes –Credit Test –Video Target: compare different investment options

Test Expectations 2 per table No talking Do not get up until everyone is done. Teacher will collect tests. Remain quiet until teacher tells you otherwise. Eyes on own paper.

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April 6, 2015 Early Work: What are the 3 C’s of Credit? Schedule –Video: Debt Slapped Target: Understand the dangers of credit.

Debt Slapped 1.What fees come with Credit cards? 2.What loans are the best loans? School, House, Car, Credit Card? why 3.How do you make money grow? 4.What is compound interest? How can it be good, How can it be bad for you? 5.How do you control your spending? What is one idea?

6.How can you avoid carrying large sums of money in your wallet to pay for expenses? 7.What is a budget? 8.What are some negatives of school loans? 9.What is a credit report? 10.How often should you check your credit?

Food Unit