1. Chapter 18 Responsibilities and Costs of Credit

2. Lesson 18.1 Using Credit Responsibly Responsibilities of consumer credit Responsibilities of consumer credit Protecting yourself from credit card fraud Protecting yourself from credit card fraud Avoiding unnecessary credit costs Avoiding unnecessary credit costs

3. Responsibilities of Consumer Credit Responsibilities to yourself: Garnishment – a legal process that allows part of your paycheck to be withheld for payment of a debt Garnishment – a legal process that allows part of your paycheck to be withheld for payment of a debt Better Business Bureau/Chamber of Commerce – provide information about businesses and complaints against them Better Business Bureau/Chamber of Commerce – provide information about businesses and complaints against them

4. Responsibilities of Consumer Credit Responsibilities to yourself: Comparison shop Comparison shop Compare prices of goods Compare prices of goods Compare credit features, costs, and availability, billing cycles, APRs, etc. Compare credit features, costs, and availability, billing cycles, APRs, etc.

5. Responsibilities of Consumer Credit Responsibilities to creditors: Limit spending to what you can repay Limit spending to what you can repay Make all payments promptly Make all payments promptly Read and understand credit agreements Read and understand credit agreements Contact the creditor immediately if: Contact the creditor immediately if: Problem with bill or merchandise Problem with bill or merchandise Emergency prevents making a payment Emergency prevents making a payment

6. Responsibilities of Consumer Credit Creditors’ responsibilities to you: Honestly representing goods and services Honestly representing goods and services Inform customers about rules/regulations Inform customers about rules/regulations Promptly reporting accurate information to credit reporting agencies Promptly reporting accurate information to credit reporting agencies Establish sound lending and credit policies Establish sound lending and credit policies Effectively assist customers with solving credit problems Effectively assist customers with solving credit problems

7. Protecting Yourself From Credit Card Fraud Safeguarding your cards: Credit card tips: Credit card tips: Sign card Sign card Carry only cards you need Carry only cards you need Maintain list of credit card information (account numbers, contact information) Maintain list of credit card information (account numbers, contact information) Notify issuer of lost or stolen card Notify issuer of lost or stolen card Watch your card during transactions Watch your card during transactions

8. Protecting Yourself From Credit Card Fraud Safeguarding your cards: Destroy paper containing account information Destroy paper containing account information Do not lend your card to anyone Do not lend your card to anyone Cut up expired cards Cut up expired cards Don’t give information over the phone to unknown parties Don’t give information over the phone to unknown parties Keep sales receipts to compare to monthly statements Keep sales receipts to compare to monthly statements

9. Protecting Yourself From Credit Card Fraud Protecting your cards online: Deal only with companies you know and trust Deal only with companies you know and trust Look for ‘secure site’ symbol on website Look for ‘secure site’ symbol on website Review companies’ privacy policy Review companies’ privacy policy Look for seals from Better Business Bureau or TRUSTe Look for seals from Better Business Bureau or TRUSTe Do not respond to pop-up offers Do not respond to pop-up offers

10. Avoiding Unnecessary Credit Costs Guidelines to minimize the cost of credit: Accept only the amount of credit that you need Accept only the amount of credit that you need Make more than the minimum payment Make more than the minimum payment Do not increase credit spending when your income increases Do not increase credit spending when your income increases Keep the number of credit cards to a minimum Keep the number of credit cards to a minimum

11. Avoiding Unnecessary Credit Costs Guidelines to minimize the cost of credit: Pay cash for purchases under $25 Pay cash for purchases under $25 Understand the cost of credit Understand the cost of credit Shop for loans Shop for loans Take advantage of rebate programs Take advantage of rebate programs Rebate – a partial refund of an amount spent Rebate – a partial refund of an amount spent