1. Credit Terms and Conditions What happens when you overspend and cannot pay…

2. Over-The-Limit Fee This is what you are assessed, if you spend over the limit on your credit card. Sometimes if you make a purchase that extends your credit card balance, instead of declining it your purchase will go through, but you will be charged an extra fee. The credit card company makes MORE money off you by doing this.

3. Universal Default Credit Card companies have started using this to penalize customers for making late payments; on top of the late fee, they can hike up your interest rate for a late fee…for example you have a 10% APR, and you make a late payment, your next bill might show a 15% APR!

4. What is a better option Putting a car on credit so you can have it now? Saving money so you can purchase the car outright? Credit/financing gives you the car immediately, but you must factor repayment into your budget Saving and buying forces you to wait, but you have no credit to worry about The question then, do we delay gratification, or pay the price for immediate needs?

5. The Rewards of Credit Convenience: internet purchasing, travel expenses, and not having to carry large sums of cash. Protection: buyer protection-damaged purchases, unauthorized purchases Emergencies: car breaking down, airfare for a family need-repairs or tickets can be purchased immediately

6. The Rewards of Credit Build Credit: establishes credit history for bigger purchases down the road Gratification: sometimes people would be unable to save the money required for a home or car; credit is the only option. Special Offers: reduced interest rates, buy now no payments until… Perks: points, airline miles etc.

7. Risks of Credit Interest: items are more expensive with credit- potentially than they would be with cash Overspending: credit tempts people to live beyond their means Debt: The total amount of money you owe lenders Identity Theft: exposing SSN or credit card numbers to others.

8. Exercise 4C Page 46 Fill out the spaces with your thoughts on credit.

9. What you need to get credit SSN Drivers License Number Date Of Birth Address and Telephone Name of Employer Monthly Income Other Payments and Debts Rent or Mortgage Amount

10. The 4 C’s Collateral: something of value that you own, which gets put up to secure the loan. Examples- your home for a second mortgage, your car for a title loan

11. The 4 C’s Capitol: Items of value that you have, for which if you can not pay your loan back, creditors will assume. Examples- investment and savings accounts

12. The 4 C’s Capacity: your ability to repay the loan. Your employment history is a factor here…both steady income and steady employment

13. The 4 C’s Character: Are you trustworthy? If you show a history of paying bills on time you look trustworthy to a lender.

14. Exercise 4E Fill out loan application Identify which fields represent the 4 C’s of credit