3. Credit Card: A card that allows you to buy something on credit. Buying a product or service now but agreeing to pay for it later. Credit:  Credit is a LOAN the credit card company gives you.  You can pay back parts of that loan in monthly installments with interest or all at once and owe no interest.

4. Rihanna wants…$1,000 Charge $1,000 to credit card $1,000 loan + interest NO interest A.) Pay off bill in full by the due date INTEREST B.) Make monthly payments, carry a balance

5. Money paid for the use of money Annual Percentage Rate = the rate of interest being charged for a loan over a year’s time. The money you still need to pay off on your credit card bill after the end of the statement period. The least amount of money you can pay the credit card company each statement period. The length of time before your loan starts accumulating interest. The highest amount of money you can charge to your card. Interest Interest Rate (APR) Balance Minimum Payment Grace Period Credit Limit

6. Convenient Don’t need to carry large amounts of cash Can make big purchases and pay for them in small increments over time Good for emergencies Perks Rewards (cash, airline miles, etc.) Wealth-building Good credit scores are necessary for future borrowing Paying on time shows you are worthy of getting more credit in the future (mortgage, car loan, etc.)

7. Interest Paid Purchases may end up costing you a lot more Overspending Doesn’t seem like real money Buying things you don’t need is tempting! Debt You could end up getting into serious debt problems!

8.  Fees = Some credit cards charge you a monthly fee or an annual fee for having the option of borrowing their money  Late Payments = If you don’t pay your credit card bill on time, you will be charged a late fee, AND your interest rate might go up…temporarily or permanently  Intro Rates = Some credit cards give you a low interest rate to start off with, but then that rate increases after a few months or a year. Make sure to read the fine print in order to find out if a credit card would raise your interest rate after a while

9. She owes: She makes a minimum payment of $30 Rihanna charges $1,000 to a credit card with an APR of 18% She makes a minimum payment of $30 Statement 1 Statement 2 $ 970 + INTEREST $954.55 + INTEREST $984.55 $1,000 Statement 3 $968.86 $$$$$

10. 3.9 years! $396 in interest! If Rihanna continues to make the minimum payment ($30) each month, how long will it take her to pay off her credit card bill and how much interest will she end up paying? If Rihanna continues to make the minimum payment ($30) each month, how long will it take her to pay off her credit card bill and how much interest will she end up paying? What?! HOW MUCH DID THE PURSE really COST HER?

11. $500 charge on a credit card with 16.5% APR  Minimum Payment of $10 ◦ Time to Pay off? ◦ Interest Paid?  Monthly Payment of $25 ◦ Time to Pay off? ◦ Interest Paid?  Monthly Payment of $100 ◦ Time to Pay off? ◦ Interest Paid? 7 years, 4 months $376 2 years $92 6 months $22 What if you paid in full? Time to Pay off: Interest Paid: 1 month $0

12. A number between 300 and 850 that represents the strength of your credit record.  Like a high school GPA Below 620 => bad score Above 760 => very good score A record of your financial history  Like a high school transcript Credit History Credit Score

13. Used to determine your “credit-worthiness” to lenders

14. Pay all your bills on timeLimit the number of cards you haveUse your card frequently but responsiblyMaintain low balances at all timesVary the types of credit you have***

15. Credit Card Issuers & Lenders Credit cards, home loans etc. Determine interest rates (APR) Auto Insurers Determine premium and interest rates Employers Will you be a responsible employee? Landlords Are you a reliable tenant?

16. The High Credit Score Guy- get 5% interest on his car loan Low Credit Score Guy -13% interest on his car loan THE BETTER YOUR CREDIT SCORE IS, THE LESS YOU PAY FOR THINGS YOU WANT!!!

17. Freecreditreport.com Freecreditscore.com

18. Annualcreditreport.com: This is the ONLY place to go to get a free credit report A report of all your credit history (Like a school report card)

19. Borrow only what you know you can repay Choose a card that is appropriate for you Pay debts off in full if possible – DON’T MAX OUTLimit the number of cards you have – one is enough!Report lost or stolen credit cards immediately Review your statement carefully and report inaccurate information or unauthorized charges