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2. CREDIT AND CREDIT CARDS Credit Cards – 2012 – 178.6 million customers held 1 or more credit cards Total number of credit cards in use – 1.5 billion Average number of credit cards per person – 3.5 National credit card debt was 793.1 billion (2012) The average debt per household was $15,799(2012) 2012 – 1,219,132 individuals filed for bankruptcy Guinness Book of World Records – 1 person with 1,497 Credit Cards (2005)

3. CREDIT AND CREDIT CARDS Use of Credit Cards – Advantages Buy and enjoy expensive items while still paying for them Convenience  Traveling  Mail or Internet Financial Emergencies Student loans Purchase of vehicles and homes

4. CREDIT AND CREDIT CARDS Disadvantages – Increase in cost due to interest and fees Overspending False sense of security Risk – Poor Credit Rating Future earnings are “earmarked” Frenzies Poor purchases – goods not needed Predatory Lending Living beyond ones means or income

5. CREDIT AND CREDIT CARDS Advertising or Promotions – Hidden messages False advertising Loans – Are they Equal? APR Credit Limit Finance Charge Minimum payment and over limit fees

8. CREDIT AND CREDIT CARDS Credit Worthiness – 3C’s Collateral Character Capacity

9. CREDIT AND CREDIT CARDS Important Terms – Annual Percentage Rate (APR) Credit Score & Credit Rating Due Date Finance Charge Grace Period Minimum Payment Cost/Benefit Analysis

10. CREDIT REPORTS – CREDIT RATING Credit Reporting Agencies (CRA’s) – Important role in determining who receives credit and how much is obtained Gather and sell personal credit information  Payment tendencies  Amount of debt  Available credit  Loans, tax liens, judgments, bankruptcy  Employment status and salary history  Residencies and aliases

11. CREDIT REPORTS – CREDIT RATING Credit Reporting Agencies (CRA’s) – Equifax Experian TransUnion

12. CREDIT REPORTS – CREDIT RATING Credit Reports Matter – Information can affect one’s present and future financial life Poor credit ratings prevent people from obtaining good credit rates or any credit at all Ways to Establish Credit – Open a savings or checking account Bank Loan Credit Card

13. CREDIT REPORTS – CREDIT RATING Ways to Establish Credit – Small credit purchase Cell phone or Internet in your name Membership to a Credit Union Questions to Consider – What is a credit report and what kind of information does it contain? Who maintains, updates, and uses this information? Why is a good credit report important?