Understanding Credit Cards

Understanding Credit Cards
2015 Educurious Partners--All rights reserved Financial Literacy_Credit Cards

Learning Outcomes Students will learn about credit cards
Student will learn how interest rates can affect the have an impact on the length they have to pay off credit cards 2015 Educurious Partners--All rights reserved Financial Literacy_Credit Cards

Discuss the importance of managing credit card payments
Lesson Tasks Discuss the cost of using a credit card to purchase something you really want and only making the minimum payments Discuss the importance of managing credit card payments 2015 Educurious Partners--All rights reserved Financial Literacy_Credit Cards

What does Credit mean?

What is Buying on/with Credit?
Credit- purchasing goods, services or money with a promise to pay at a future date Lender- provides credit to borrowers based on the borrower’s creditworthiness Borrower is in need of funds and requests to receive credit from a lender 2015 Educurious Partners--All rights reserved Financial Literacy_Credit Cards

Paying back Credit If approved, the borrower will receive money from the lender Borrower repays principle (amount borrowed) + interest 2015 Educurious Partners--All rights reserved Financial Literacy_Credit Cards

Closed-end vs. Open-end Credit
Closed – end credit Open – end credit Definition A one-time loan Credit extended in advance Purpose of loan (what is purchased) Specified in application May be used for a variety of purposes Payments Specified number of equal payments Varies- can be paid in one payment or a series of equal or unequal payments Loan Amount Agreed upon during the application process May be increased Examples Mortgage, automobile, education loans Credit cards 2015 Educurious Partners--All rights reserved Financial Literacy_Credit Cards

Using credit cards

Credit Cards Credit limit varies based upon the cardholder’s perceived creditworthiness May continue to borrow as long as the credit limit (maximum dollar amount loaned) is not exceeded 2015 Educurious Partners--All rights reserved Financial Literacy_Credit Cards

Advantages & Disadvantages to Using Credit Cards
Convenient payment tool Interest can be costly when a balance is revolved Useful for emergencies Additional penalty fees may apply Often required to hold a reservation Tempting to overspend Able to purchase “big ticket” items and spread out payments Risk of identity theft Protection against fraud Responsible for lost/stolen cards Opportunity to establish a positive credit history Applying for multiple accounts in a short period of time can lower your credit score Online shopping is safer than using a debit card Possibility of receiving bonuses

Debit Card vs. Credit Card
A debit card looks like a credit card but is electronically connected to the cardholder’s bank account Money is immediately withdrawn from the cardholders checking account Watch this video to see the difference: Credit & Debit 2015 Educurious Partners--All rights reserved Financial Literacy_Credit Cards

Positive Credit Card Use
Proper credit card use Earn a high credit score Helps develop positive creditworthiness 2015 Educurious Partners--All rights reserved Financial Literacy_Credit Cards

Negative Credit Card Use
Improper credit card use Develops negative creditworthiness Lower credit score 2015 Educurious Partners--All rights reserved Financial Literacy_Credit Cards

Credit card terminology

Credit Card Terminology
Credit limit: how much money you can put on your card Variable interest: the rate can be changed based on other financial indicators Fixed rate interest: the rate is the same from month to month 2015 Educurious Partners--All rights reserved Financial Literacy_Credit Cards

Balance: how much money you have to pay on your card Minimum payment: the smallest amount you have to pay on your card each month Introductory rate: the interest rate applied for a short period of time. 2015 Educurious Partners--All rights reserved Financial Literacy_Credit Cards

Transaction fees: money charged to you if you use your card to get cash, make a late payment, go over your credit limit, etc. Interest rate: the price of using someone else’s money 2015 Educurious Partners--All rights reserved Financial Literacy_Credit Cards

Credit card offer activity

Credit Card Chaos Activity Directions:
Two credit card terms will be provided Identify which term is true on your credit card offer Move to the correct side of the room indicated by the arrow on the slide 2015 Educurious Partners--All rights reserved Financial Literacy_Credit Cards

Variable-rate APR for Purchases Fixed-rate APR for Purchases
Credit Card Chaos Does your credit card offer have a Fixed or Variable Rate for purchases (after Introductory Rate): Variable-rate APR for Purchases Fixed-rate APR for Purchases OR 2015 Educurious Partners--All rights reserved Financial Literacy_Credit Cards

Does your credit card offer have an Introductory Rate?
Credit Card Chaos Does your credit card offer have an Introductory Rate? No Introductory Rate Introductory Rate OR 2015 Educurious Partners--All rights reserved Financial Literacy_Credit Cards

OR Credit Card Chaos APR for Purchases greater than or equal to 15%
Does your credit card offer have an APR for Purchases greater or less than 15%: APR for Purchases greater than or equal to 15% APR for Purchases less than 15% OR 2015 Educurious Partners--All rights reserved Financial Literacy_Credit Cards

Minimum Interest Charge No Minimum Interest Charge
Credit Card Chaos Does your credit card offer have a Minimum Interest Charge? Minimum Interest Charge No Minimum Interest Charge OR 2015 Educurious Partners--All rights reserved Financial Literacy_Credit Cards

Does your credit card offer have an Annual Fee?
Credit Card Chaos Does your credit card offer have an Annual Fee? Annual Fee No Annual Fee OR 2015 Educurious Partners--All rights reserved Financial Literacy_Credit Cards

Does your credit card offer have a Late Payment Fee?
Credit Card Chaos Does your credit card offer have a Late Payment Fee? Late Payment Fee No Late Payment Fee OR 2015 Educurious Partners--All rights reserved Financial Literacy_Credit Cards

You & Your Credit Card

How do I obtain a Credit Card?
Comparison shop for a credit card Compare credit card offers and determine which card to apply for Complete a credit application A form requesting information about a person’s ability to repay Lenders conduct a credit investigation A comparison of information on credit application to information on a credit report Approval? Applicant may or may not be approved (depends on creditworthiness) Credit card companies send pre-approved credit card applications in the mail when the individual has passed their initial credit check 2015 Educurious Partners--All rights reserved Financial Literacy_Credit Cards

Summary of Account Activity
Andrew’s Credit Card Statement Summary of Account Activity Previous Balance 535.07 Payments Purchases Balance Transfers Cash Advances Past Due Amount +0.00 Fees Charged +69.45 Interest Charged +10.89 New Balance $1,784.53 Credit Limit $2,000.00 Available credit $215.47 Statement closing date 3/22/2012 Days in billing cycle 30 2 Payment Information New Balance $ Minimum Payment Due $53.00 Payment Due Date 4/20/12 Late Payment Warning: If we do not receive your minimum payment by the date listed above, you may have to pay a $35 fee and your APR’s may be increased up to the Penalty rate of 28.99% Minimum Payment Warning: If you make only the minimum payment each period, you will pay more in interest and it will take you longer to pay off your balance. For example… 3 1 4 If you make no additional charges using this card and each month you pay… You will pay off the balance shown on this statement in about… And you will end up paying an estimated total of… Only the minimum payment 10 years $3,284 $62 3 years $2,232 Summary of Account Activity Previous Balance 535.07 Payments Purchases Balance Transfers Cash Advances Past Due Amount +0.00 Fees Charged +69.45 Interest Charged +10.89 New Balance $1,784.53 Credit Limit $2,000.00 Available credit $215.47 Statement closing date 3/22/2012 Days in billing cycle 30 Summary of Account Activity Overview of credit card 5 6 Notice of Changes to Your Interest Rates You have triggered the Penalty APR of 28.99%. This change will impact your account as follows: Transactions made on or after 4/9/12: As of 5/10/12, the Penalty APR will apply to these transactions. We may keep the APR at this level indefinitely. Transactions made before 4/9/12: Current rates will continue to apply to these transactions. If you become more than 60 days late on your account, the Penalty APR will apply to hose transactions as well. Important Changes to Your Account Terms The following is a summary of changes that are being made to your account terms. For more detailed information, please refer to the booklet enclosed with this statement. These changes will impact your account as follows: Transactions made on or after 4/9/12: As of 5/10/12, APR for Purchases will increase to 16.99%. Transactions made before 4/9/12: Current APRs will continue to apply to these transactions. 7 Transactions Reference Number Trans Date Post Date Description of Transaction or Credit Amount XXXX1 2/22 2/23 Store #1 $529.57 XXXX2 2/25 2/26 Payment $ XXXX3 Cash Advance $318.00 XXXX4 3/15 3/17 Balance Transfer $785.00 Fees XXXX5 Late Fee $35.00 XXXX6 2/27 Balance Transfer Fee $23.55 XXXX7 2/28 Cash Advance Fee $10.90 Total Fees for this Period $69.45 Interest Charged Interest Charge on Purchases $6.31 Interest Charge on Cash Advances $4.58 Total Interest for this Period $10.89 How much did Andrew charge in new purchases during this credit card billing cycle? 8 9 2012 Totals Year-to-Date Total fees charged in 2012 $90.14 Total interest charged in 2012 $18.27 $529.57 Interest Charge Calculation Type of Balance Annual Percentage Rate (APR) Balance Subject to Interest Rate Interest Charge Purchases 14.99% $512.14 $6.31 Cash Advances 21.99% $253.50 $4.58 Balance Transfers 0.00% $637.50 $0.00 10 2015 Educurious Partners--All rights reserved Financial Literacy_Credit Cards

Minimum payment amount Date payment is due
Andrew’s Credit Card Statement Summary of Account Activity Previous Balance 535.07 Payments Purchases Balance Transfers Cash Advances Past Due Amount +0.00 Fees Charged +69.45 Interest Charged +10.89 New Balance $1,784.53 Credit Limit $2,000.00 Available credit $215.47 Statement closing date 3/22/2012 Days in billing cycle 30 2 Payment Information New Balance $ Minimum Payment Due $53.00 Payment Due Date 4/20/12 Late Payment Warning: If we do not receive your minimum payment by the date listed above, you may have to pay a $35 fee and your APR’s may be increased up to the Penalty rate of 28.99% Minimum Payment Warning: If you make only the minimum payment each period, you will pay more in interest and it will take you longer to pay off your balance. For example… Payment Information Total new balance Minimum payment amount Date payment is due Payment due dates must be consistent month to month Monthly statements must be sent at least 21 days before payment is due 3 1 4 If you make no additional charges using this card and each month you pay… You will pay off the balance shown on this statement in about… And you will end up paying an estimated total of… Only the minimum payment 10 years $3,284 $62 3 years $2,232 Payment Information New Balance $ Minimum Payment Due $53.00 Payment Due Date 4/20/12 Late Payment Warning: If we do not receive your minimum payment by the date listed above, you may have to pay a $35 fee and your APR’s may be increased up to the Penalty rate of 28.99% Minimum Payment Warning: If you make only the minimum payment each period, you will pay more in interest and it will take you longer to pay off your balance. For example… 5 6 Notice of Changes to Your Interest Rates You have triggered the Penalty APR of 28.99%. This change will impact your account as follows: Transactions made on or after 4/9/12: As of 5/10/12, the Penalty APR will apply to these transactions. We may keep the APR at this level indefinitely. Transactions made before 4/9/12: Current rates will continue to apply to these transactions. If you become more than 60 days late on your account, the Penalty APR will apply to hose transactions as well. Important Changes to Your Account Terms The following is a summary of changes that are being made to your account terms. For more detailed information, please refer to the booklet enclosed with this statement. These changes will impact your account as follows: Transactions made on or after 4/9/12: As of 5/10/12, APR for Purchases will increase to 16.99%. Transactions made before 4/9/12: Current APRs will continue to apply to these transactions. 7 Transactions Reference Number Trans Date Post Date Description of Transaction or Credit Amount XXXX1 2/22 2/23 Store #1 $529.57 XXXX2 2/25 2/26 Payment $ XXXX3 Cash Advance $318.00 XXXX4 3/15 3/17 Balance Transfer $785.00 Fees XXXX5 Late Fee $35.00 XXXX6 2/27 Balance Transfer Fee $23.55 XXXX7 2/28 Cash Advance Fee $10.90 Total Fees for this Period $69.45 Interest Charged Interest Charge on Purchases $6.31 Interest Charge on Cash Advances $4.58 Total Interest for this Period $10.89 If you make no additional charges using this card and each month you pay… You will pay off the balance shown on this statement in about… And you will end up paying an estimated total of… Only the minimum payment 10 years $3,284 $62 3 years $2,232 8 What is Andrew’s minimum payment due for this billing cycle? 9 2012 Totals Year-to-Date Total fees charged in 2012 $90.14 Total interest charged in 2012 $18.27 Interest Charge Calculation Type of Balance Annual Percentage Rate (APR) Balance Subject to Interest Rate Interest Charge Purchases 14.99% $512.14 $6.31 Cash Advances 21.99% $253.50 $4.58 Balance Transfers 0.00% $637.50 $0.00 10 $53.00 2015 Educurious Partners--All rights reserved Financial Literacy_Credit Cards

Late Payment Warning Minimum Payment Warning
Andrew’s Credit Card Statement Late Payment Warning What will happen if a payment is late- usually additional fees and a higher interest rate Summary of Account Activity Previous Balance 535.07 Payments Purchases Balance Transfers Cash Advances Past Due Amount +0.00 Fees Charged +69.45 Interest Charged +10.89 New Balance $1,784.53 Credit Limit $2,000.00 Available credit $215.47 Statement closing date 3/22/2012 Days in billing cycle 30 2 Payment Information New Balance $ Minimum Payment Due $53.00 Payment Due Date 4/20/12 Late Payment Warning: If we do not receive your minimum payment by the date listed above, you may have to pay a $35 fee and your APR’s may be increased up to the Penalty rate of 28.99% Minimum Payment Warning: If you make only the minimum payment each period, you will pay more in interest and it will take you longer to pay off your balance. For example… 3 1 4 If you make no additional charges using this card and each month you pay… You will pay off the balance shown on this statement in about… And you will end up paying an estimated total of… Only the minimum payment 10 years $3,284 $62 3 years $2,232 Payment Information New Balance $ Minimum Payment Due $53.00 Payment Due Date 4/20/12 Late Payment Warning: If we do not receive your minimum payment by the date listed above, you may have to pay a $35 fee and your APR’s may be increased up to the Penalty rate of 28.99% Minimum Payment Warning: If you make only the minimum payment each period, you will pay more in interest and it will take you longer to pay off your balance. For example… 5 6 Important Changes to Your Account Terms The following is a summary of changes that are being made to your account terms. For more detailed information, please refer to the booklet enclosed with this statement. These changes will impact your account as follows: Transactions made on or after 4/9/12: As of 5/10/12, APR for Purchases will increase to 16.99%. Transactions made before 4/9/12: Current APRs will continue to apply to these transactions. Minimum Payment Warning Estimate of how long it can take to pay off balance if only the minimum payment is made Notice of Changes to Your Interest Rates You have triggered the Penalty APR of 28.99%. This change will impact your account as follows: Transactions made on or after 4/9/12: As of 5/10/12, the Penalty APR will apply to these transactions. We may keep the APR at this level indefinitely. Transactions made before 4/9/12: Current rates will continue to apply to these transactions. If you become more than 60 days late on your account, the Penalty APR will apply to hose transactions as well. 7 Transactions Reference Number Trans Date Post Date Description of Transaction or Credit Amount XXXX1 2/22 2/23 Store #1 $529.57 XXXX2 2/25 2/26 Payment $ XXXX3 Cash Advance $318.00 XXXX4 3/15 3/17 Balance Transfer $785.00 Fees XXXX5 Late Fee $35.00 XXXX6 2/27 Balance Transfer Fee $23.55 XXXX7 2/28 Cash Advance Fee $10.90 Total Fees for this Period $69.45 Interest Charged Interest Charge on Purchases $6.31 Interest Charge on Cash Advances $4.58 Total Interest for this Period $10.89 If you make no additional charges using this card and each month you pay… You will pay off the balance shown on this statement in about… And you will end up paying an estimated total of… Only the minimum payment 10 years $3,284 $62 3 years $2,232 8 How long will it take Andrew to pay off the balance of his credit card if he only pays the minimum payment? 9 2012 Totals Year-to-Date Total fees charged in 2012 $90.14 Total interest charged in 2012 $18.27 Interest Charge Calculation Type of Balance Annual Percentage Rate (APR) Balance Subject to Interest Rate Interest Charge Purchases 14.99% $512.14 $6.31 Cash Advances 21.99% $253.50 $4.58 Balance Transfers 0.00% $637.50 $0.00 10 10 years 2015 Educurious Partners--All rights reserved Financial Literacy_Credit Cards

Notice of Changes to Your Interest Rates
Andrew’s Credit Card Statement Summary of Account Activity Previous Balance 535.07 Payments Purchases Balance Transfers Cash Advances Past Due Amount +0.00 Fees Charged +69.45 Interest Charged +10.89 New Balance $1,784.53 Credit Limit $2,000.00 Available credit $215.47 Statement closing date 3/22/2012 Days in billing cycle 30 2 Payment Information New Balance $ Minimum Payment Due $53.00 Payment Due Date 4/20/12 Late Payment Warning: If we do not receive your minimum payment by the date listed above, you may have to pay a $35 fee and your APR’s may be increased up to the Penalty rate of 28.99% Minimum Payment Warning: If you make only the minimum payment each period, you will pay more in interest and it will take you longer to pay off your balance. For example… 3 Notice of Changes to Your Interest Rates If the Penalty APR is triggered, cardholder must be notified that their rates will be increasing 1 4 If you make no additional charges using this card and each month you pay… You will pay off the balance shown on this statement in about… And you will end up paying an estimated total of… Only the minimum payment 10 years $3,284 $62 3 years $2,232 5 6 Notice of Changes to Your Interest Rates You have triggered the Penalty APR of 28.99%. This change will impact your account as follows: Transactions made on or after 4/9/12: As of 5/10/12, the Penalty APR will apply to these transactions. We may keep the APR at this level indefinitely. Transactions made before 4/9/12: Current rates will continue to apply to these transactions. If you become more than 60 days late on your account, the Penalty APR will apply to hose transactions as well. Important Changes to Your Account Terms The following is a summary of changes that are being made to your account terms. For more detailed information, please refer to the booklet enclosed with this statement. These changes will impact your account as follows: Transactions made on or after 4/9/12: As of 5/10/12, APR for Purchases will increase to 16.99%. Transactions made before 4/9/12: Current APRs will continue to apply to these transactions. Notice of Changes to Your Interest Rates You have triggered the Penalty APR of 28.99%. This change will impact your account as follows: Transactions made on or after 4/9/12: As of 5/10/12, the Penalty APR will apply to these transactions. We may keep the APR at this level indefinitely. Transactions made before 4/9/12: Current rates will continue to apply to these transactions. If you become more than 60 days late on your account, the Penalty APR will apply to hose transactions as well. 7 Transactions Reference Number Trans Date Post Date Description of Transaction or Credit Amount XXXX1 2/22 2/23 Store #1 $529.57 XXXX2 2/25 2/26 Payment $ XXXX3 Cash Advance $318.00 XXXX4 3/15 3/17 Balance Transfer $785.00 Fees XXXX5 Late Fee $35.00 XXXX6 2/27 Balance Transfer Fee $23.55 XXXX7 2/28 Cash Advance Fee $10.90 Total Fees for this Period $69.45 Interest Charged Interest Charge on Purchases $6.31 Interest Charge on Cash Advances $4.58 Total Interest for this Period $10.89 Has Andrew triggered the Penalty APR? 8 Yes, he will pay 28.99% on all transactions made after 4/9/12. 9 2012 Totals Year-to-Date Total fees charged in 2012 $90.14 Total interest charged in 2012 $18.27 Interest Charge Calculation Type of Balance Annual Percentage Rate (APR) Balance Subject to Interest Rate Interest Charge Purchases 14.99% $512.14 $6.31 Cash Advances 21.99% $253.50 $4.58 Balance Transfers 0.00% $637.50 $0.00 10 2015 Educurious Partners--All rights reserved Financial Literacy_Credit Cards

Important Changes to Your Account Terms
Andrew’s Credit Card Statement Important Changes to Your Account Terms Must be notified of any significant changes at least 45 days before the changes take effect Any changes can only apply to new charges Account can be closed before the changes go into effect Summary of Account Activity Previous Balance 535.07 Payments Purchases Balance Transfers Cash Advances Past Due Amount +0.00 Fees Charged +69.45 Interest Charged +10.89 New Balance $1,784.53 Credit Limit $2,000.00 Available credit $215.47 Statement closing date 3/22/2012 Days in billing cycle 30 2 Payment Information New Balance $ Minimum Payment Due $53.00 Payment Due Date 4/20/12 Late Payment Warning: If we do not receive your minimum payment by the date listed above, you may have to pay a $35 fee and your APR’s may be increased up to the Penalty rate of 28.99% Minimum Payment Warning: If you make only the minimum payment each period, you will pay more in interest and it will take you longer to pay off your balance. For example… 3 1 4 If you make no additional charges using this card and each month you pay… You will pay off the balance shown on this statement in about… And you will end up paying an estimated total of… Only the minimum payment 10 years $3,284 $62 3 years $2,232 5 6 Notice of Changes to Your Interest Rates You have triggered the Penalty APR of 28.99%. This change will impact your account as follows: Transactions made on or after 4/9/12: As of 5/10/12, the Penalty APR will apply to these transactions. We may keep the APR at this level indefinitely. Transactions made before 4/9/12: Current rates will continue to apply to these transactions. If you become more than 60 days late on your account, the Penalty APR will apply to hose transactions as well. Important Changes to Your Account Terms The following is a summary of changes that are being made to your account terms. For more detailed information, please refer to the booklet enclosed with this statement. These changes will impact your account as follows: Transactions made on or after 4/9/12: As of 5/10/12, APR for Purchases will increase to 16.99%. Transactions made before 4/9/12: Current APRs will continue to apply to these transactions. Important Changes to Your Account Terms The following is a summary of changes that are being made to your account terms. For more detailed information, please refer to the booklet enclosed with this statement. These changes will impact your account as follows: Transactions made on or after 4/9/12: As of 5/10/12, APR for Purchases will increase to 16.99%. Transactions made before 4/9/12: Current APRs will continue to apply to these transactions. 7 Transactions Reference Number Trans Date Post Date Description of Transaction or Credit Amount XXXX1 2/22 2/23 Store #1 $529.57 XXXX2 2/25 2/26 Payment $ XXXX3 Cash Advance $318.00 XXXX4 3/15 3/17 Balance Transfer $785.00 Fees XXXX5 Late Fee $35.00 XXXX6 2/27 Balance Transfer Fee $23.55 XXXX7 2/28 Cash Advance Fee $10.90 Total Fees for this Period $69.45 Interest Charged Interest Charge on Purchases $6.31 Interest Charge on Cash Advances $4.58 Total Interest for this Period $10.89 Other than implementation of the Penalty APR, will there be any other changes to Andrew’s account terms? 8 9 2012 Totals Year-to-Date Total fees charged in 2012 $90.14 Total interest charged in 2012 $18.27 Yes, his APR for Purchases is increasing to 16.99%. Interest Charge Calculation Type of Balance Annual Percentage Rate (APR) Balance Subject to Interest Rate Interest Charge Purchases 14.99% $512.14 $6.31 Cash Advances 21.99% $253.50 $4.58 Balance Transfers 0.00% $637.50 $0.00 10 2015 Educurious Partners--All rights reserved Financial Literacy_Credit Cards

Transactions Fees and Interest Charged
Andrew’s Credit Card Statement Summary of Account Activity Previous Balance 535.07 Payments Purchases Balance Transfers Cash Advances Past Due Amount +0.00 Fees Charged +69.45 Interest Charged +10.89 New Balance $1,784.53 Credit Limit $2,000.00 Available credit $215.47 Statement closing date 3/22/2012 Days in billing cycle 30 2 Transactions List of all transactions since the last statement Should be reviewed for errors Payment Information New Balance $ Minimum Payment Due $53.00 Payment Due Date 4/20/12 Late Payment Warning: If we do not receive your minimum payment by the date listed above, you may have to pay a $35 fee and your APR’s may be increased up to the Penalty rate of 28.99% Minimum Payment Warning: If you make only the minimum payment each period, you will pay more in interest and it will take you longer to pay off your balance. For example… 3 1 4 Transactions Reference Number Trans Date Post Date Description of Transaction or Credit Amount XXXX1 2/22 2/23 Store #1 $529.57 XXXX2 2/25 2/26 Payment $ XXXX3 Cash Advance $318.00 XXXX4 3/15 3/17 Balance Transfer $785.00 Fees XXXX5 Late Fee $35.00 XXXX6 2/27 Balance Transfer Fee $23.55 XXXX7 2/28 Cash Advance Fee $10.90 Total Fees for this Period $69.45 Interest Charged Interest Charge on Purchases $6.31 Interest Charge on Cash Advances $4.58 Total Interest for this Period $10.89 If you make no additional charges using this card and each month you pay… You will pay off the balance shown on this statement in about… And you will end up paying an estimated total of… Only the minimum payment 10 years $3,284 $62 3 years $2,232 5 6 Notice of Changes to Your Interest Rates You have triggered the Penalty APR of 28.99%. This change will impact your account as follows: Transactions made on or after 4/9/12: As of 5/10/12, the Penalty APR will apply to these transactions. We may keep the APR at this level indefinitely. Transactions made before 4/9/12: Current rates will continue to apply to these transactions. If you become more than 60 days late on your account, the Penalty APR will apply to hose transactions as well. Important Changes to Your Account Terms The following is a summary of changes that are being made to your account terms. For more detailed information, please refer to the booklet enclosed with this statement. These changes will impact your account as follows: Transactions made on or after 4/9/12: As of 5/10/12, APR for Purchases will increase to 16.99%. Transactions made before 4/9/12: Current APRs will continue to apply to these transactions. Fees and Interest Charged Fees and interest charges must be listed separately 7 Transactions Reference Number Trans Date Post Date Description of Transaction or Credit Amount XXXX1 2/22 2/23 Store #1 $529.57 XXXX2 2/25 2/26 Payment $ XXXX3 Cash Advance $318.00 XXXX4 3/15 3/17 Balance Transfer $785.00 Fees XXXX5 Late Fee $35.00 XXXX6 2/27 Balance Transfer Fee $23.55 XXXX7 2/28 Cash Advance Fee $10.90 Total Fees for this Period $69.45 Interest Charged Interest Charge on Purchases $6.31 Interest Charge on Cash Advances $4.58 Total Interest for this Period $10.89 8 Did Andrew pay a late fee? 2012 Totals Year-to-Date Total fees charged in 2012 $90.14 Total interest charged in 2012 $18.27 9 2012 Totals Year-to-Date Total fees charged in 2012 $90.14 Total interest charged in 2012 $18.27 Yes, he paid $35.00 for a late fee. Interest Charge Calculation Type of Balance Annual Percentage Rate (APR) Balance Subject to Interest Rate Interest Charge Purchases 14.99% $512.14 $6.31 Cash Advances 21.99% $253.50 $4.58 Balance Transfers 0.00% $637.50 $0.00 10 2015 Educurious Partners--All rights reserved Financial Literacy_Credit Cards

Year-to-Date Totals Interest Charge Calculation
Andrew’s Credit Card Statement Year-to-Date Totals Total amount paid in fees and interest charges for the current year Summary of Account Activity Previous Balance 535.07 Payments Purchases Balance Transfers Cash Advances Past Due Amount +0.00 Fees Charged +69.45 Interest Charged +10.89 New Balance $1,784.53 Credit Limit $2,000.00 Available credit $215.47 Statement closing date 3/22/2012 Days in billing cycle 30 2 Payment Information New Balance $ Minimum Payment Due $53.00 Payment Due Date 4/20/12 Late Payment Warning: If we do not receive your minimum payment by the date listed above, you may have to pay a $35 fee and your APR’s may be increased up to the Penalty rate of 28.99% Minimum Payment Warning: If you make only the minimum payment each period, you will pay more in interest and it will take you longer to pay off your balance. For example… Transactions Reference Number Trans Date Post Date Description of Transaction or Credit Amount XXXX1 2/22 2/23 Store #1 $529.57 XXXX2 2/25 2/26 Payment $ XXXX3 Cash Advance $318.00 XXXX4 3/15 3/17 Balance Transfer $785.00 Fees XXXX5 Late Fee $35.00 XXXX6 2/27 Balance Transfer Fee $23.55 XXXX7 2/28 Cash Advance Fee $10.90 Total Fees for this Period $69.45 Interest Charged Interest Charge on Purchases $6.31 Interest Charge on Cash Advances $4.58 Total Interest for this Period $10.89 3 1 4 If you make no additional charges using this card and each month you pay… You will pay off the balance shown on this statement in about… And you will end up paying an estimated total of… Only the minimum payment 10 years $3,284 $62 3 years $2,232 What is the total amount of interest Andrew has paid in the year 2012? 5 6 Notice of Changes to Your Interest Rates You have triggered the Penalty APR of 28.99%. This change will impact your account as follows: Transactions made on or after 4/9/12: As of 5/10/12, the Penalty APR will apply to these transactions. We may keep the APR at this level indefinitely. Transactions made before 4/9/12: Current rates will continue to apply to these transactions. If you become more than 60 days late on your account, the Penalty APR will apply to hose transactions as well. Important Changes to Your Account Terms The following is a summary of changes that are being made to your account terms. For more detailed information, please refer to the booklet enclosed with this statement. These changes will impact your account as follows: Transactions made on or after 4/9/12: As of 5/10/12, APR for Purchases will increase to 16.99%. Transactions made before 4/9/12: Current APRs will continue to apply to these transactions. $18.27 7 Transactions Reference Number Trans Date Post Date Description of Transaction or Credit Amount XXXX1 2/22 2/23 Store #1 $529.57 XXXX2 2/25 2/26 Payment $ XXXX3 Cash Advance $318.00 XXXX4 3/15 3/17 Balance Transfer $785.00 Fees XXXX5 Late Fee $35.00 XXXX6 2/27 Balance Transfer Fee $23.55 XXXX7 2/28 Cash Advance Fee $10.90 Total Fees for this Period $69.45 Interest Charged Interest Charge on Purchases $6.31 Interest Charge on Cash Advances $4.58 Total Interest for this Period $10.89 Interest Charge Calculation Summary of the different types of transactions 2012 Totals Year-to-Date Total fees charged in 2012 $90.14 Total interest charged in 2012 $18.27 8 9 2012 Totals Year-to-Date Total fees charged in 2012 $90.14 Total interest charged in 2012 $18.27 Interest Charge Calculation Type of Balance Annual Percentage Rate (APR) Balance Subject to Interest Rate Interest Charge Purchases 14.99% $512.14 $6.31 Cash Advances 21.99% $253.50 $4.58 Balance Transfers 0.00% $637.50 $0.00 Why is it important to understand how to read a credit card statement? Interest Charge Calculation Type of Balance Annual Percentage Rate (APR) Balance Subject to Interest Rate Interest Charge Purchases 14.99% $512.14 $6.31 Cash Advances 21.99% $253.50 $4.58 Balance Transfers 0.00% $637.50 $0.00 10

Be credit card smart!

Credit Card Safety Tips
Do not leave cards lying around, and report lost/stolen cards promptly Close unwanted accounts by writing and phone then cut up the card Sign card with a signature and “Please see I.D.” Keep a list of all cards, account numbers, and phone lists separate from cards Shred all pre-approved credit card offers, applications, or solicitations Do not give out account numbers unless making a purchase 2015 Educurious Partners--All rights reserved Financial Literacy_Credit Cards

Minimum Payments Required amount borrower must pay is a monthly minimum payment Monthly minimum payment is typically 2.5% – 5% of the total balance due Not paying the minimum payment by the due date results in penalties and late fees 2015 Educurious Partners--All rights reserved Financial Literacy_Credit Cards

Minimum Payments To prepare for her first semester of college, Miranda purchased a new computer for $1000 and textbooks for $500, spending a total of $1500 on her credit card charging 15% APR. How much would Miranda pay in interest if she makes the minimum payment? Payment Made Time to pay off Total interest paid Total amount paid Full Payment $ 1500 1 Month $ 0 Partial Payment $ 135 1 year $ 125 $ 1625 Minimum Payment $ 30 11 Years $ 1413 $ 2913 2015 Educurious Partners--All rights reserved Financial Literacy_Credit Cards

The True Cost of Buying on Credit
What’s something you’ve had your eye on for awhile, but just can’t afford? How much does it cost? Click this link to the True Cost Calculator and let’s see how much it will REALLY cost if you charged it to a credit card and only paid the minimum payments. Assume your APR is 14%. 2015 Educurious Partners--All rights reserved Financial Literacy_Credit Cards

Here’s a typical “wish list” of someone who is just getting his or her own place or someone who just got their first paycheck and wants to spend it all! You can run each of these through the calculator and see what the “true cost” is. Shoes for work: $95 Couch for apartment: $500 Bed + mattress set” $300 for bed, $500 for mattress set iPhone 6, 128 GB: $399 TV (60” Class 1080p):, $699 on sale! ($999 normally) TOTAL: $2, 493 2015 Educurious Partners--All rights reserved Financial Literacy_Credit Cards

Look what happens if you purchase all of these items on your credit card this month. This graphic shows what the cost is to you if you pay only the minimum balance (starts at $49.86, but shrinks over time) or pay $100 a month. 2015 Educurious Partners--All rights reserved Financial Literacy_Credit Cards

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Understanding Credit Cards

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Understanding Credit Cards

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