1. Credit Cards Plastic Money!

2. Credit Cards 90% of credit card purchases are impulse purchases! Only 54% of card owners pay off their balances each month!

3. Types of Cards Charge Cards ▫No pre-set spending limit ▫Must be paid in full each month  American Express Credit Cards ▫Pre-set spending limit ▫Allow you to carry a balance  As long as you pay the minimum monthly payment ▫VISA, Mastercard

4. Credit Cards - Interest Rates vary on different cards ▫Range from 15% - 25% annually ▫Interest charged daily  Daily rate = annual rate divided by 365 Charged on all balances after due date ▫Interest is backdated to the date of purchase

5. Credit Cards - Interest Interest is charged on cash advances immediately ▫No grace period, interest accumulates immediately

6. Credit Cards – Days Late Be careful calculating the number of days late… ▫Example  A Purchase made on December 3 rd – not paid until January 5 th. ▫How many days in December didn’t you have it?  2  Days in December = 31 -2 = 29 ▫How many days in January did you have it?  5  Total = 29 + 5 = 34 days

7. Credit Cards Example ▫Monica makes a $400 purchase on her VISA on January 5 th. ▫She receives her statement on the 20 th, but does not pay it. ▫ Her next statement arrives on February 20 th. ▫Calculate the interest she is charged if her annual interest rate is 21%.