1. Using Credit Responsibility
Money Management
Ch 18

2. List 5 ways to safeguard your card
Sign your cards as soon as you receive them
Carry only card you need
Keep a list of Credit Card numbers, expiration dates, and phone numbers
Notify Creditor if card is lost or stolen
Watch your card during transactions
Do not lend card to anyone or leave it lying around
Destroy expired cards
Don’t give credit number over phone
Keep your receipts to verify against statement

3. Protecting your card online
Deal with companies you know and trust
Make sure it is a secured site
Legitimate sites have a privacy policy
Look for Better Business Bureau or TRUSTe Sites
Phishing is a scam that uses pop-up messages or to deceive you

4. List Ways to Avoid Unnecessary Credit Costs
Accept only the amt. of credit that you need
Make more than the minimum payment
Do not increase credit spending when your income increases
Keep the number of credit card to a minimum

5. List Ways to Avoid Unnecessary Credit Costs (Continued)
Pay cash for purchases under $25
Understand the cost of credit
Shop for loan
Take advantage of rebate programs
Money back on your spending amount

6. Why Credit Costs Vary Source of credit
some lenders offer better deals than others
Amt. financed and length of time
the longer it takes you to pay back your charge the more it costs
Ability to repay debt
Type of Credit selected
Different financing charges

7. Why Credit Costs Vary (con’t)
Collateral (Secured load)
Car loan or house loan
Economic Conditions
Business’s costs of providing credit
Businesses pass along cost to customers

8. Three Methods of Calculating Finance Charges
Adjusted Balance Method
Apply the finance charge only to the amt. owed after you’ve paid your bill each month
Example
Bill is $400
You pay $300
$400-$300=$100
$100*1.5% (.015) = $1.50

9. Three Methods of Calculating Finance Charges (con’t)
Previous Balance Method
Creditors use the previous balance, they impose the finance charge on the entire amt owed from previous month
$400* 1.5%(.015)= $6.00

10. Three Methods of Calculating Finance Charges (con’t)
Average Daily Balance (Used by most Creditors)
Calculate your balance each day of the billing cycle
Ave Daily Balance is $250
**$250 * 1.5% (.015) = $3.75
**To figure avg. daily balance: (400 x 15 days) + ($100 x days)
= $250
30 days

11. Adjusted Balance Method Previous Balance Method
Compare methods
Adjusted Balance Method
Previous Balance Method
Average Daily Method
Monthly interest Rate
1.5%
Previous balance
$400
Payments
$300
Interest Charge
$1.50
$6.00
$3.75
($100*.015)
($400*.015)
**($250 * .015)
**To figure average daily balance: (400 x 15 days) + ($100 x days)
= $250
30 days