1. Credit Law in Society Objective: To understand the use of and acquisition of credit.

2. What is it?  Credit  Creditors  Debtors  Finance charge  Interest  Unsecured credit  Secured credit  Collateral  Annual percentage rate

3. How much do you owe?  You buy a dozen DVDs on sale for $99.00. And you charge it on your credit card. You receive your billing statement indicating that you owe $99.00. Your interest rate is 1.5% What is your balance?

4. How much do you owe?  You pay $40 of the bill.  The next month you receive your statement. Now what is your balance?  40.00 X.015 = $0.60  Balance: $40.60

5. What is the difference between a debit card and a credit card?  Credit Card = borrowed money  Debit Card = your savings or checking

6. When to use credit…  Is it worth having the item before you have saved enough money to pay for it?  What items are good long-term investments or necessities?  Car, home, large necessities, education…  75% of Americans carry some debt.  Using credit can make items cost more.  PAY YOUR BALANCE!!!  Credit card users spend more.

7. Variable interest rates  Good and bad.  Rates can go down or up.  Currently many home buyers who purchased that obtained variable rate loans are not able to pay. Foreclosure.  Video www.rhsroughriders.orgwww.rhsroughriders.org

8. What do lenders want to know before giving you credit?  Are you reliable?  Are you stable?  Do you have a steady income?  Are you able to afford what you buy?  Do you have a good credit history?  Equal Credit Opportunity Act Protects consumers based on sex, age, marital status, race, religion, etc….

9. Costly Credit Arrangement  Warning!!!!!!  Balloon payment Last payment larger than the rest  Acceleration clause Miss payment-lender can demand faster payment  Bill consolidation All debts combined under one rate

10. Truth in Lending Act  Creditor must tell you in writing: Before you sign Finance charge APR Rules for late payments

11. Denied Credit?  Poor risk???  Equal Credit Opportunity Act Creditors must inform consumers why they were denied. Ability to know info in your credit file and dispute errors.

12. Default  Unable to pay off loan for whatever reason.  What can you do…? Start a budget Notify creditors immediately. Seek consumer credit counseling. Seek assistance from friends and family.

13. Bankruptcy  Cannot pay  Assets put in hands of federal courts to resolve.  Long-term consequences  Stain on credit for 10 years or more  No escaping taxes, child support, student loans, alimony

14. Creditor Collection  Repossession  Court Action – sue Results  Garnishment - withhold money from your check  Attachment – force bank to pay creditor from debtor accounts.