1. Labor Unions and Credit

2. Labor Unions Association of workers organized to improve wages and working conditions for its members. A group has more power than an individual.

3. Development Poor working conditions in factories in the 1800’s. Workers were fired for no reason. Workers were often blacklisted.

4. Knights of Labor Founded in 1869. Attempted to organize all laboring people. Terrence V. Powderly became their leader after 1879. Membership increased to 700,000 between the years 1885-1886. Began to decline and ended in 1900.

5. American Federation of Labor Organized in 1886. Accepted only skilled workers. Women, African- Americans, and immigrants were not accepted. AFL had separate unions for different crafts. Samuel Gompers was president of the union. He wanted higher wages, shorter hours, and benefits for disabled workers. Between 1890-1900, membership reached 500,000.

6. Union membership policies Closed Shop: Companies hire only union members. Union Shop: Worker must join the union after a specific time period. Agency Shop: Not required to join the union, but must pay dues. Open Shop: Companies may hire workers regardless of membership.

7. Collective Bargaining Process where union leaders and employers discuss employment terms. Compromise is the main issue. Three steps: Negotiation, mediation, and arbitration. Negotiation: Labor and management meet to discuss contract issues. Mediation: A neutral person helps both sides reach agreements. The Federal Mediation and Conciliation Service will provide a mediator. Arbitration: Two sides submit issues to a third party for a final decision.

8. When Collective Bargaining Fails Strike: Workers refuse to work. –Picketing: Discourage workers from working. –Boycott: Refuse to purchase goods or services from the company. –Scab: Worker willing to work on company terms. Lockout: Management prevents workers from working.

9. Credit Receiving something with the promise of payment at a later time. Principle: Actual cost of the good or service. Interest: Amount paid for the use of money.

10. Charge Accounts Buy goods and services at individual stores and pay for them later. Credit limit: Maximum amount a person can buy with the promise of payment at a later time. Three types of accounts are installment, regular, and revolving.

11. Account facts Installment Account Regular Repaid with equal amount. A bill is sent at end of cycle. Mortgage: Loan on property. Can not be used again until the balance is paid off. Revolving A bill is sent at end of cycle. Can continue use as long as the balance is below credit limit.

12. Credit and Debit cards Credit cards: Make purchases without cash. –Used to purchase items and receive loans. –Charge high interest rates (Avg. 18%) in the 1990’s. –Lower interest rates if the customer is “reliable”. Debit Cards: Transfer funds electronically. –Popular use in Automated Teller Machines (ATM’s) –Now can be tied directly to checking accounts (check cards)

13. Applying for credit Fill out an application. Credit Bureau will do a credit check. Creditor will ask for references. This check gives your income, debt, and ability to pay debts in the past.

14. Credit Rating Rating of risk: Excellent, good, average, or poor. This gives the lender an idea of reliability. They also look at capacity to pay, character, and collateral. A secured loan is a loan based on collateral, something the borrower is willing to give up if the loan is not paid back. An unsecured loan is one based on reputation.

15. Government Regulations Equal Credit Opportunity Act: A person can not be denied credit because of race, religion, national origin, gender, marital status, or age. Usury laws: Restrict the amount of interest companies can charge.

16. Bankruptcy When debts are so large, that they can not be repaid. Most of what debtors own is given to creditors. It is very hard to re-establish credit.

17. Financial Institutions Commercial banks: Main functions are accepting deposits, lending money, and transferring funds. Savings and loan: Very much like commercial banks. Normally smaller banks. Savings banks: Original purpose was to help those overlooked by large banks. Sometimes charge higher interest rates. Credit Unions: Offer high interest on saving and low interest on loans. Must be a member to use their services. Finance Companies: Charge high interest rates. Used by those with bad credit history.

18. Finance Charges and Annual Percentage Rate (APR) Finance Charges: Cost of credit expressed in dollars. APR: Cost of credit as a percentage. May differ from place to place.