1. Take Charge of Credit
© 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 Credit?
Credit - is receiving fund either directly or indirectly to buy goods and services today with the promise to pay for them in the future
Principal - The amount that was originally borrowed
Interest - the amount that the borrower must pay for the use of someone else’s funds.
© 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. Types of Loans / Credit Secured Loan Unsecured Loan
Backed up with collateral.
Can be the item being purchased (house, car, etc.)
Guaranteed only by a promise to repay it.
Not backed with Collateral.
Interest rate is usually higher
Examples: Credit cards, medical & utility bills

4. Types of Loans / Credit Revolving Installment
Approved up to a certain credit limit
Can use at any time
Minimum payments must be made monthly
Examples: credit cards
Borrow a set amount
Make equal payments
Examples: car loan, mortgages, student loans

5. Group Activity
Each group sort your envelop of information in to 2 categories:
Advantages of Credit &
Disadvantages of Credit
Look on the back of the cards. Be ready to give an example of the one with a colored “dot” on it.
© 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

6. Advantages Convenient Useful for emergencies
Often required to hold a reservation
Purchase expensive items earlier
Eliminate the need to carry around large amounts of cash
Protection against fraud
Establish a positive credit history
Online shopping is safer than a debit card b/c of the Fair Credit Billing Act protection
Incentives, bonuses, frequent flyer miles
© 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

7. Disadvantages Paying interest Additional fees are common
Tempting to overspend
Risk of Identity theft
Can cause large amounts of debt
Responsible for lost/stolen cards
Applying for multiple accounts can lower your credit score
If misused, can lower credit score
© 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

8. 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

9. What is a Credit Card? Pre-approved credit
Credit- When a financial institution lends an individual money and trusts he or she will pay it back
Used to purchase items now and pay for them later
The word credit comes from the Latin word “Credo” meaning “I believe.”
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

10. Credit Card Terms Interest- Fee for borrowed money
Credit Line – Maximum amount of money that can be charged to a credit card
Annual Percentage Rate- Interest rate charged to the cardholder on the amount borrowed
Finance Charge – Possible charges assessed to an account for credit card use
© 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. Credit Card Terms Continued
Annual Fees - Fee charged once per year for credit card ownership
Minimum Payment – Minimum payment of a credit card bill that must be paid
Due Date – Date payment is due
Late Payment Fee - 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

12. Safety Tips
Shred any unwanted credit card offers or credit cards received in the mail
Always check your credit card statement to make sure there are no false purchases
Sign card with signature and “Please See ID”
Do not leave cards lying around
Close unused accounts in writing and by phone, 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

13. Safety Tips continued
Do not give out account number unless making secure purchases
Keep a list of all cards, their account numbers, and phone numbers separate from cards
Report 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

14. Remember….
Only use a credit card when there is no doubt about ability to pay off the charges at the end of the month
© 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

15. True/False Trivia
92% of college students have a credit card by their sophomore year?
TRUE
© 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

16. 1 out of every 10 college students owes between $3,000 and $7,000 in credit card debt.
FALSE
Actually 1 in 5 college students owes between $3,000 and $7,000 in credit card debt.
© 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

17. 10% of teens 12-19 have their own credit card.
TRUE
© 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

18. Among Americans who have credit cards, the average number they own is two.
FALSE
The average number of credit cards American’s own is 3.6.
© 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

19. The number of convenience users who "always pay-off in-full" has declined over the past three years from 42% to 37%.
TRUE
© 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

20. 40% of [teenage] students are likely to buy a pair of jeans (or something similar) they really want even if they do not have the money to pay for it.
TRUE
© 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

21. Americans spent $15 billion in credit card fees in 2004, an 18% jump over the previous year.
FALSE
Americans actually paid more than $24 billion in credit card fees in 2004.
© 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

22. Almost half (47%) of all college students carry four or more credit cards.
TRUE
(Source:
© 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

23. If you lose your credit card you should wait until your next bill comes to see if any one has been using it.
FALSE
You should report a stolen credit card immediately.
© 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