Instructors Presentation (PowerPoint)
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    Instructors Presentation (PowerPoint) Instructors Presentation (PowerPoint) Presentation Transcript

    • C.A.R.E. Credit Abuse Resistance Education Program
    • C.A.R.E. A Program of: U.S. Bankruptcy Courts of West Virginia The West Virginia State Bar The WV Bankruptcy Law Committee
    • C.A.R.E.
      • The C.A.R.E. program was founded by the Honorable John C. Ninfo, II, Bankruptcy Judge for the Western District of New York.
      • As of March 2007, the C.A.R.E. program is in 39 states and the District of Columbia.
    • C.A.R.E.
    • A Word from Judge Ninfo
      • “It is the hope of the program that students will not go down the road of consumer credit abuse once they understand:
      • (1) the true cost of consumer credit;
      • (2) how difficult it is to repay consumer debt incurred to buy and do things that you really can’t afford and don’t need;
    • A Word from Judge Ninfo
      • (3) the many consequences of financial problems, which are becoming more numerous and serious;
      • (4) the need to have savings and how to effectively budget with a view towards needs versus wants;
    • A Word from Judge Ninfo
      • (5) that just maintaining debt is not being able to afford it, affording debt is being able to pay it back; and
      • (6) it is better to live consumer debt free.”
    • The Need for Credit Education
      • 68% of teens report that they have not had a meaningful discussion about responsible credit card use with their parents.
      • 31% of teens, 18-19 years of age, have credit cards in their own name.
      • 71% of young adult cardholders revolve their balances compared to 55% of all cardholders.
    • The Need for Credit Education
      • People under the age of 25 are one of the fastest growing groups of bankruptcy filers.
      • One out of five young adult households are in debt hardship – meaning that over 40% of their income goes to debt payments each month.
      • In the last decade, young adults (ages 18-24) saw credit card debt increase 104%.
    • The Need for Credit Education
      • Graduating college students average $20,402 of debt - $3,262 of that is credit card debt.
    • The Need for Credit Education
      • 18% is the current average starting interest rate for students and young adults.
    • The Cost of Credit Card Debt
    • Paying Interest – Less Savings
      • 43% of Americans spend more than they make, and in 2005, for the first time since the Great Depression, our savings rate in this country was negative.
    • The Cost of Credit Card Debt
      • An American consumer with $10,000 in credit card debt, paying an average interest rate of 14% will pay $117 per month in interest alone.
      • If they could invest that same amount each month of their work life (approximately 40 years), it would grow to $307,103 (assuming a 7% return).
    • Making the Minimum Payment
      • Paying the minimum monthly payment on $2,000 with a 31% interest rate will take 15.6 years to pay off the debt at a total cost of $5,348.15, including $3,348.15 in interest.
    • The Cost of Credit Card Debt
      • Minimum Payment vs. Fixed Payment
      • ($2,000 at 18% Interest)
      $2,477.99 $3,115.69 Total Purchase Cost $477.99 $1,115.69 Total Interest Paid 2.6 9.5 Years to Pay Off Fixed Monthly Payment of $80 Minimum Monthly Payment
    • Cash vs. Credit $410 $420 $435 Amount repaid $32.00 $56.00 Finance Charge $35.00 $36.25 Monthly Payment 12 12 Number of Monthly Payments 13% 27% APR $410 $388 $379 Cash Price Store C Store B Store A
    • The Importance of Good Credit
    • The Importance of Good Credit
      • Your history of payments, employment, and salary makes you a good candidate for a loan.
    • Better Loan Terms 12% 10% 8.0% APR $1,320.12 $808.09 $427.27 Finance Charge $6,320.12 $5,808.09 $5,427.27 Total Repaid 48 36 24 Number of Payments $131.67 $161.34 $226.14 Monthly Payment $5,000 $5,000 $5,000 Amount of Loan Lender 3 Bank Lender 2 Dealership Lender 1 Credit Union
    • The Importance of Good Credit
      • You will be viewed as financially trustworthy and given better loan terms.
      • It may help you rent an apartment and obtain employment – most landlords and prospective employers will look at your credit report.
    • Consequences of Credit Abuse
      • Credit abuse may make it impossible to complete a degree.
      • Denial of employment, credit, student loans, or leases. Higher interest rates and higher insurance rates.
      • Bad credit rating.
      • Emotional stress, divorce, and family problems.
      • Bankruptcy.
    • Avoiding Credit Abuse
      • Distinguish between wants and needs.
      • Have only one credit card. Opt for a low credit limit on that one card.
      • Pay off your balance each month.
      • Never make only the minimum payment.
    • Bringing C.A.R.E. to Your Classroom Please visit the C.A.R.E. website at