1. Take Charge of Credit Cards
© Family Economics & Financial Education – December 2005 – Get Ready to Take Charge of Your Finances – Take Charge of Credit Cards
Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences at the University of Arizona

2. What is a Credit Card? Pre-approved credit
Used to purchase items now and pay for them later
The creditor is saying in effect, he believes the borrower is willing and able to keep his promise to pay the money back plus interest. You are making a promise and an agreement, giving your word you will pay back the money. IT is NOT free money!!!
© Family Economics & Financial Education – December 2005 – Get Ready to Take Charge of Your Finances – Take Charge of Credit Cards
Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences at the University of Arizona

3. Credit Card Terms Interest-
???– Maximum amount of money that can be charged to a credit card
???-Interest rate charged to the cardholder on the amount borrowed
???– Possible charges assessed to an account for credit card use
???– Amount of time allowed before finance charges are applied
© Family Economics & Financial Education – December 2005 – Get Ready to Take Charge of Your Finances – Take Charge of Credit Cards
Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences at the University of Arizona

4. Credit Card Terms Continued
???- Fee charged once per year for credit card ownership
???– Minimum payment of a credit card bill that must be paid
???– Date payment is due
???- Fee charged when a cardholder does not make the minimum monthly payment by the due date
© Family Economics & Financial Education – December 2005 – Get Ready to Take Charge of Your Finances – Take Charge of Credit Cards
Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences at the University of Arizona

5. Fair Truth in Lending Act
Schumer Box
Fair Truth in Lending Act
Information required by law to inform consumer of all costs associated with use of a credit card
Annual Percentage Rate for Purchases
Grace Period for Purchases
Minimum Finance Charges
Balance Calculation Method for Purchases
Annual Fees
Transaction Fees for Cash Advances
Late Payment Fees
19.9%
Not less than
25 days
$.50 when a finance charge at a periodic rate is charged
Average daily balance method (including new purchases)
$20 per year
2% with a minimum fee of $3
$29
© Family Economics & Financial Education – Revised October 2004 – Credit Unit – Selecting a Credit Card
Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences at the University of Arizona

6. Balance Calculation Method cont.
???– Interest is only paid on the previous balance, not on purchases made since the last payment
???– If the balance is not zero, interest is applied to new purchases when they are made, if the balance is zero, a grace period is allowed before interest is charged
© Family Economics & Financial Education – Revised October 2004 – Credit Unit – Selecting a Credit Card
Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences at the University of Arizona

7. Balance Calculation Method cont.
???– Regardless of the previous month’s balance, interest is applied to new purchases as they are made
???– This method should be avoided by consumers, as it is the least-beneficial. The average daily balance is determined on 60 days, rather than 30 days, so finance charges are doubled. A zero balance must be held for two months in order to avoid charges
© Family Economics & Financial Education – Revised October 2004 – Credit Unit – Selecting a Credit Card
Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences at the University of Arizona

8. Advantages Advantages and Disadvantages - smartboard activity
© Family Economics & Financial Education – December 2005 – Get Ready to Take Charge of Your Finances – Take Charge of Credit Cards
Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences at the University of Arizona

9. Safety Tips
______ any unwanted credit card offers or credit cards received in the mail
Always _____ your credit card statement to make sure there are no false purchases
Sign card with ______ and “______”
Do not _____ cards lying around
______ unused accounts in ________ and by ________, then cut up the card
© Family Economics & Financial Education – December 2005 – Get Ready to Take Charge of Your Finances – Take Charge of Credit Cards
Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences at the University of Arizona

10. Safety Tips continued
Do not give out __________ unless making secure purchases
Keep a list of all _______, their __________, and ____________ separate from cards
___________ lost or stolen cards promptly
© Family Economics & Financial Education – December 2005 – Get Ready to Take Charge of Your Finances – Take Charge of Credit Cards
Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences at the University of Arizona

11. Assignment
Reading the Credit Card Statement (practicalmoneyskills.com activity 8-2a)
Taking Credit By The Horns (FEFE worksheet A1)
Research the Web for 3 Credit Card Offers
Compare and Evaluate
Pick one and justify why
© Family Economics & Financial Education – December 2005 – Get Ready to Take Charge of Your Finances – Take Charge of Credit Cards
Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences at the University of Arizona