1. Unit 6: Credit Section 3: Make Credit Work for You

2. I CAN:  Apply the 20/10 Rule  Describe how to use a credit card properly  Explain how to avoid paying interest on credit cards  Explain bankruptcy

3. Credit Cards can be GOOD  If your credit card has no annual fees, you can charge small purchases (like gas) to the card  If you ALWAYS pay the monthly balance IN FULL, you will NEVER pay interest and will build GREAT credit  Credit is also good to have in case of an emergency  Another bonus, if your card is stolen, you won’t have to pay for fraudulent charges. (Whereas, if someone stole your money, its all just gone!)

4. Credit Cards can be DANGEROUS  If you spend more than you can pay IN FULL at the end of the month, you will owe interest.  If you make only minimum payments, you will pay TONS of interest for a VERY long time  Follow the 20-10 Rule: never borrow more than 20 percent net income (not including a mortgage). Payments on those loans shouldn't cost more than 10 percent of your monthly net income. Amount charged to credit card in one purchase APR Minimum payment Time to pay off the credit card Total amount paid in interest Total amount paid $2,00018%$50.0062 months$1,077.25$3,077.25 $50012%$25.0023 months$60.67$560.67

5. Don’t be forced to Declare Bankruptcy!!  Bankruptcy means that a court has declared that you have so much debt that you cannot repay it. You will have to pay as much as the court deems necessary.  What this means for your future:  Your credit score is DESTROYED for a minimum of 7 years  B/c you file in court, your info is a matter of public record… this means no privacy  Its possible your will have to forfeit your property Bankruptcy is BAD, LIVE what I teach you in PF!!

6. CAN I?  Apply the 20/10 Rule  Describe how to use a credit card properly  Explain how to avoid paying interest on credit cards  Explain bankruptcy I can prove this by completing activities: 2.6 2.7 2.9 2.10 challenge 2-C