1. Standard
SSEPF4 – The student will evaluate the costs and benefits of using a credit card.
SSEPF4a- List factors that affect credit worthiness.

2. Credit
Credit is the ability to obtain goods or services before paying them, based on a promise to pay later.
Each time a person uses credit he or she is in effect borrowing money.

3. Revolving Credit
It is credit that is available up to a limit and automatically renewed when debts are paid off or down.

4. The 3 C’s of Credit Worthiness
Character
Are you a good person?
Do you have a job?
Have you used your credit wisely?
Capacity
How much money do you want?
Are you able to pay it back?
Collateral
Property or other security used to guarantee the repayment of a loan

5. Other Factors that affect Credit Worthiness
Payment on time
How much credit are you using
How many people have looked at your credit

6. Benefits of good credit
Low interest rates meaning lower payments
Easy to get loans and more credit

7. Causes of problems High Monthly Payment Cannot afford to buy things
Unpaid Balances or Worst Case Scenario Bankruptcy

8. What is the first step in choosing a credit card?
Determine how it will be used
Emergencies
Purchases
Bill paying
Gas

9. What about APR? APR is the Annual Percentage Rate.
The cost of credit (finance charge) expressed as a yearly percentage.
Credit Cards can have many different APR’s.
Purchases
Cash Advances
Balance transfers
Late Payments or Introductory Rates

10. Fixed vs. Variable APR
Fixed APR’s do not change with out notice from the credit company
Variable APR’s can change at specified times according to your contract (usually every 6 months).

11. Credit Limit
The maximum total amount the user may charge on the card.

12. Common Incentives Rebates Frequent Flyer Miles
Additional Warranty coverage
Car rental insurance
Travel accident insurance
Rewards points

13. Common Fees Credit Cards Charge
Annual fee – Charged for having the card
Cash-advance fee – when the user gets cash from on ATM
Balance transfer fee – when the user moves a balance from another credit card

14. More Fees…..
Late payment fee – charged when payment is received after the due date.
Over-the-credit limit fee – when the user goes over their credit limit.
Credit-limit increase fee – when a user asks for an increase in the credit limit.

15. And even more fees…..
Set up fee – charged when a new account is opened
Return item fee – when the user’s payment check bounces.
Other fees
Paying by phone
Talking to a customer service person
Reporting to credit bureau’s

16. Credit Card Companies must disclose:
APR’s for purchases
Other APR’s
Variable rate information
Grace period for repayment of balances
Method of computing the balance for purchases
Annual fees
Minimum finance charge
Transaction fee for cash advances
Balance-transfer fees
Late-payment fees
Over-the-credit-limit fees

17. Consider this situation
It is midnight and your car breaks down. You are far away from home. You use your cell phone to call an auto-repair service. The service representative says that a service visit will cost $50, plus the cost of any parts or labor that are necessary to get you driving again. All you have is $7 in your pocket (you have no debit card). Should you use a credit card? Explain your answer.