7.02 d fefe_credit_card_ppt

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7.02 d fefe_credit_card_ppt

  1. 1. Understanding a Credit Card “Take Charge of Your Finances” rd Advanced Level it CaCred
  2. 2. 1.4.1.G1 ard rd die C a eCrt dit C What is Credit?Cr Credit- when goods, services or money is received in exchange for Credit is derived from a promise to pay a the Latin word “credo” meaning “I believe” definite sum of money at a future date Why would a person want to use credit? © Family Economics & Financial Education – Updated May 2011 – Credit Unit – Understanding a Credit Card – Slide 2 Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences Take Charge America Institute at The University of Arizona
  3. 3. 1.4.1.G1 ard rd die C a eCrt dit C Obtaining CreditCr Lender determines Borrower requests whether to grant theBorrower is in need to receive credit borrower credit based of credit from a lender on perceived creditworthiness Lender- person or Creditworthiness- an Borrower- person or organization who has the individual’s ability and organization that is resources to provide the willingness to pay the receiving the money borrower money money back Why would a lender assess a borrower’s creditworthiness before granting credit? © Family Economics & Financial Education – Updated May 2011 – Credit Unit – Understanding a Credit Card – Slide 3 Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences Take Charge America Institute at The University of Arizona
  4. 4. 1.4.1.G1 ard rd die C a eCrt dit C Paying Back CreditCr Borrower is usually expectedIf approved, the to pay interest in Borrower pays borrower will addition to the money back receive money money borrowedfrom the lender Interest - the price of money Why would a lender charge a borrower interest? © Family Economics & Financial Education – Updated May 2011 – Credit Unit – Understanding a Credit Card – Slide 4 Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences Take Charge America Institute at The University of Arizona
  5. 5. 1.4.1.G1 ard rd die C a eCrt dit C Different Forms of CreditCr How are these forms of credit different? VS. Closed-end Credit Open-end Credit © Family Economics & Financial Education – Updated May 2011 – Credit Unit – Understanding a Credit Card – Slide 5 Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences Take Charge America Institute at The University of Arizona
  6. 6. Closed-end vs. 1.4.1.G1 ard rdCr die C a eCrt dit C Open-end Credit Open-end Closed-end credit (revolving) creditDefinition Credit extended A one-time loan in advancePurpose of May be used for a Specified inloan (what is variety of application purposespurchased) © Family Economics & Financial Education – Updated May 2011 – Credit Unit – Understanding a Credit Card – Slide 6 Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences Take Charge America Institute at The University of Arizona
  7. 7. Closed-end vs. 1.4.1.G1 ard rdCr die C a eCrt dit C Open-end Credit Closed-end credit Open-end credit Varies- can be paid in Specified number one payment or a series Payments of equal payments of equal or unequal payments Loan Agreed upon during May be increased Amount the application process Mortgage, Examples automobile, Credit cards education loans © Family Economics & Financial Education – Updated May 2011 – Credit Unit – Understanding a Credit Card – Slide 7 Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences Take Charge America Institute at The University of Arizona
  8. 8. 1.4.1.G1 ard rd die C a eCrt dit C What is a Credit Card?Cr Buy Now, Pay Later Pre-approved credit which can be used for the purchase of goods and services now and payment of them later May continue to borrow as long as the credit limit (maximum dollar amount loaned) is not exceeded Credit limit varies based upon the cardholder’s perceived creditworthiness © Family Economics & Financial Education – Updated May 2011 – Credit Unit – Understanding a Credit Card – Slide 8 Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences Take Charge America Institute at The University of Arizona
  9. 9. 1.4.1.G1Cr ard rd die C a eCrt dit C Credit Card Interest Interest is charged each month the balance is not paid in full Rate at which interest is charged is referred to as: Annual Percentage Rate (APR) The cost of credit expressed as a yearly interest rate © Family Economics & Financial Education – Updated May 2011 – Credit Unit – Understanding a Credit Card – Slide 9 Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences Take Charge America Institute at The University of Arizona
  10. 10. 1.4.1.G1 ard rd die C a eCrt dit C Minimum PaymentsCr • Required to make at least a minimum payment each month – Usually only a small percentage (2.5-5%) of the total balance due © Family Economics & Financial Education – Updated May 2011 – Credit Unit – Understanding a Credit Card – Slide 10 Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences Take Charge America Institute at The University of Arizona
  11. 11. 1.4.1.G1 ard rd die C a eCrt dit C Minimum PaymentsCr To prepare for her first semester of college, Miranda purchased a new computer for $1000 and textbooks for $500, spending a total of $1500 on her credit card charging 15% APR. How much would Miranda pay in interest if she makes the minimum payment? ~ Total Payment ~ Time to ~ Total amount of Made pay off card amount paid interest paid Full Payment $1500 1 month $0 $1500 Partial $135 1 year $125 $1625 Payment Minimum $30 11 years $1413 $2913 Payment © Family Economics & Financial Education – Updated May 2011 – Credit Unit – Understanding a Credit Card – Slide 11 Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences Take Charge America Institute at The University of Arizona
  12. 12. 1.4.1.G1Cr ard rd die C a eCrt dit C Advantages & Disadvantages to Using Credit Cards • Convenient payment tool • Interest can be costly when a • Useful for emergencies balance is revolved • Often required to hold a • Additional penalty fees may reservation apply • Able to purchase “big ticket” • Tempting to overspend items and spread out • Risk of identity theft payments • Responsible for lost/stolen • Protection against fraud cards • Opportunity to establish a • Applying for multiple accounts positive credit history in a short period of time can • Online shopping is safer than lower your credit score using a debit card • Possibility of receiving bonuses © Family Economics & Financial Education – Updated May 2011 – Credit Unit – Understanding a Credit Card – Slide 12 Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences Take Charge America Institute at The University of Arizona
  13. 13. 1.4.1.G1 ard rd die C a eCrt dit C What is a Debit Card?Cr • Plastic card which looks like a credit card but is electronically connected to the cardholder’s bank account • Money is immediately withdrawn from the cardholders checking account What is the difference between a credit card and a debit card? © Family Economics & Financial Education – Updated May 2011 – Credit Unit – Understanding a Credit Card – Slide 13 Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences Take Charge America Institute at The University of Arizona
  14. 14. 1.4.1.G1 ard rd die C a eCrt dit C CreditworthinessCr Credit card approval How a person uses a depends on credit card affects borrower’s perceived their creditworthiness creditworthiness Creditworthiness is determined by a credit report and/or credit score © Family Economics & Financial Education – Updated May 2011 – Credit Unit – Understanding a Credit Card – Slide 14 Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences Take Charge America Institute at The University of Arizona
  15. 15. 1.4.1.G1 ard rd die C a eCrt dit C Credit HistoryCr Credit Report A record of a consumer’s credit history that includes information about credit card use as well as the use of other types of credit Credit Score A number that summarizes an individual’s credit record and history; a numeric “grade” of a consumer’s financial reliability Credit cards can have a positive or negative impact on an individual’s credit history © Family Economics & Financial Education – Updated May 2011 – Credit Unit – Understanding a Credit Card – Slide 15 Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences Take Charge America Institute at The University of Arizona
  16. 16. 1.4.1.G1 Cr ard rd die C a eCrt dit C Positive Credit Card Use Helps develop Proper credit positive credit Earn a high card use history and credit score credit reportA high credit score gives the opportunity to have lower interest rates on loans, the privilege to use different forms of credit, and an easier approval process for future credit © Family Economics & Financial Education – Updated May 2011 – Credit Unit – Understanding a Credit Card – Slide 16 Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences Take Charge America Institute at The University of Arizona
  17. 17. 1.4.1.G1Cr ard rd die C a eCrt dit C Positive Credit Card Use • Examples of positive credit card behaviors: – Paying credit card balances in full every month – Paying credit card bills on time – Applying for only credit cards that are needed – Keeping track of all charges by keeping receipts and using a check register – Checking the monthly credit card statement for errors © Family Economics & Financial Education – Updated May 2011 – Credit Unit – Understanding a Credit Card – Slide 17 Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences Take Charge America Institute at The University of Arizona
  18. 18. 1.4.1.G1Cr ard rd die C a eCrt dit C Negative Credit Card Use Develops Improper negative Lower credit credit card credit history and credit score use reportConsumers with low credit scores have difficulty gettingloans, difficulty renting apartments, pay higher interest rates, pay higher insurance rates, and have difficulty obtaining a job © Family Economics & Financial Education – Updated May 2011 – Credit Unit – Understanding a Credit Card – Slide 18 Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences Take Charge America Institute at The University of Arizona
  19. 19. 1.4.1.G1Cr ard rd die C a eCrt dit C Negative Credit Card Use • Examples of negative credit card behaviors: – Making late credit card payments – Paying only the minimum payment – Exceeding the card’s credit limit (usually triggers a penalty fee) – Charging items that can’t be paid off immediately – Owning too many credit cards © Family Economics & Financial Education – Updated May 2011 – Credit Unit – Understanding a Credit Card – Slide 19 Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences Take Charge America Institute at The University of Arizona
  20. 20. 1.4.1.G1 ard rd die C a eCrt dit C NO CreditCr • If an individual has not used credit, they will not have any information in their credit report • Not having a credit report can cause an individual to be denied credit © Family Economics & Financial Education – Updated May 2011 – Credit Unit – Understanding a Credit Card – Slide 20 Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences Take Charge America Institute at The University of Arizona
  21. 21. 1.4.1.G1 ard rd die C a eCrt dit C Credit Card OffersCr Credit card issuers are required to disclose the terms and fees of credit cards in an easy to read box format Called the Schumer Box Must direct to the Federal Reserve website ( http://www.federalreserve.gov/creditcard/) to obtain more information about credit cards © Family Economics & Financial Education – Updated May 2011 – Credit Unit – Understanding a Credit Card – Slide 21 Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences Take Charge America Institute at The University of Arizona
  22. 22. it Card Cred Interest Rates and Interest Charges Annual Percentage 12.99%, 13.99% or 14.99%, introductory APR for one year, based on your Rate (APR) for creditworthiness. Purchases After that, your APR will be 14.99%. This is a variable-rate APR that will vary with the market based on the Prime Rate. APR for Balance 15.99% Transfers •This APR will vary with the market based on the Prime Rate APR for Cash 21.99% Advances •This APR will vary with the market based on the Prime Rate Penalty APR and 28.99% When it Applies This APR may be applied to your account if you: 1.Make a late payment; 2.Go over your credit limit; Credit cards may charge 3.Make a payment that is returned; or 4.Do any of the above on another account that you have with us. How long will the Penalty APR apply? If your APR’s are increased for any of these many different types of reasons, the Penalty APR will apply until you make six consecutive minimum payments when due. How to Avoid Paying Your due date is at least 25 days after the close of each billing cycle. We will not charge interest rates Interest on you any interest on purchases if you pay your entire balance by the due date each Purchases month. Minimum Interest If you are charged interest, the charge will be no less than $1.50. Charge For Credit Card Tips To learn more about factors to consider when applying for or using a credit card, visit the from the Federal website of the Federal Reserve Board at http://www.federalreserve.gov/creditcard Annual Percentage Rate (APR) Reserve Board Set-up and Fees NOTICE: Some of these set-up and maintenance fees will be assessed before you begin for Purchases Maintenance Fees using your card and will reduce the amount of credit you initially have available. For example, if you are assigned the minimum credit limit of $250, initial available credit will be only about $209.•Interest rate paid for purchases •Annual Fee: $20 •Account Set-up Fee: $20 (one-time fee) •Participation Fee: $12 annually ($1 per month)•Multiple interest rates may be Transaction Fees •Additional Card Fee: $5 annually (if applicable) • Balance Transfer: Either $5 or 3% of the amount of each transfer, whichever is greater (maximum fee: $100)listed - final interest rate may • • Cash Advance: Either $5 or 3% of the amount of each cash advance, whichever is greater Foreign Transaction: 2% of each transaction in U.S. dollarsdepend on creditworthiness of Penalty Fees • • Late Payment: $29 if balance is less than or equal to $1000 OR $35 if balance is more than $1000 Over-the-limit: $29applicant • Returned Payment: $35 * How We Will Calculate Your Balance: We use a method called “average daily balance (including new purchases).” * Loss of Introductory APR- We may end your introductory APR and apply the Penalty APR if you become more than 60 days late in paying your bill
  23. 23. Fixed vs. Variable-rate APR Interest Rates and Interest Charges•Fixed-rate APR- cannot Annual Percentage Rate (APR) for 12.99%, 13.99% or 14.99%, introductory APR for one year, based on your creditworthiness.change during the period of Purchases After that, your APR will be 14.99%. This is a variable-rate APR that will vary with the market based on the Prime Rate. APR for Balance 15.99%time outlined in a credit card Transfers •This APR will vary with the market based on the Prime Rate APR for Cash 21.99% Advances •This APR will vary with the market based on the Prime Rateagreement Penalty APR and 28.99% When it Applies This APR may be applied to your account if you: 1.Make a late payment; 2.Go over your credit limit; 3.Make a payment that is returned; or 4.Do any of the above on another account that you have with us.•Variable-rate APR- may How long will the Penalty APR apply? If your APR’s are increased for any of these reasons, the Penalty APR will apply until you make six consecutive minimum payments when due.change depending on other How to Avoid Paying Your due date is at least 25 days after the close of each billing cycle. We will not charge Interest on you any interest on purchases if you pay your entire balance by the due date each Purchases month.factors (such as economic Minimum Interest If you are charged interest, the charge will be no less than $1.50. Charge For Credit Card Tips To learn more about factors to consider when applying for or using a credit card, visit theconditions) from the Federal website of the Federal Reserve Board at http://www.federalreserve.gov/creditcard Reserve Board Fees Set-up and NOTICE: Some of these set-up and maintenance fees will be assessed before you begin Maintenance Fees using your card and will reduce the amount of credit you initially have available. For What is the APR for Purchases example, if you are assigned the minimum credit limit of $250, initial available credit will be only about $209. •Annual Fee: $20 for this credit card offer? •Account Set-up Fee: $20 (one-time fee) •Participation Fee: $12 annually ($1 per month) •Additional Card Fee: $5 annually (if applicable) 14.99% Transaction Fees • Balance Transfer: Either $5 or 3% of the amount of each transfer, whichever is greater (maximum fee: $100) • Cash Advance: Either $5 or 3% of the amount of each cash advance, whichever Is this a variable-rate APR • is greater Foreign Transaction: 2% of each transaction in U.S. dollars Penalty Fees • Late Payment: $29 if balance is less than or equal to $1000 OR $35 if balance is or a fixed-rate APR? • more than $1000 Over-the-limit: $29 • Returned Payment: $35 Variable-rate APR * How We Will Calculate Your Balance: We use a method called “average daily balance (including new purchases).” * Loss of Introductory APR- We may end your introductory APR and apply the Penalty APR if you become more than 60 days late in paying your bill
  24. 24. Watch out for “Teaser rates”- designed to get you to apply, then rates increase, review other features before applying Introductory Rate Interest Rates and Interest Charges Annual Percentage 12.99%, 13.99% or 14.99%, introductory APR for one year, based on your•Introductory rate- APR that Rate (APR) for Purchases creditworthiness. After that, your APR will be 14.99%. This is a variable-rate APR that will vary with the market based on the Prime Rate.may be charged after a credit APR for Balance Transfers 15.99% •This APR will vary with the market based on the Prime Rate APR for Cash 21.99%card is opened Advances Penalty APR and •This APR will vary with the market based on the Prime Rate 28.99% When it Applies This APR may be applied to your account if you:•Will have a different APR 1.Make a late payment; 2.Go over your credit limit; 3.Make a payment that is returned; or(usually higher) after the 4.Do any of the above on another account that you have with us. How long will the Penalty APR apply? If your APR’s are increased for any of theseintroductory period ends reasons, the Penalty APR will apply until you make six consecutive minimum payments when due. How to Avoid Paying Your due date is at least 25 days after the close of each billing cycle. We will not charge Interest on you any interest on purchases if you pay your entire balance by the due date each•Not all credit cards have an Purchases Minimum Interest month. If you are charged interest, the charge will be no less than $1.50. Chargeintroductory rate For Credit Card Tips from the Federal To learn more about factors to consider when applying for or using a credit card, visit the website of the Federal Reserve Board at http://www.federalreserve.gov/creditcard Reserve Board Fees Set-up and NOTICE: Some of these set-up and maintenance fees will be assessed before you begin What is the introductory rate for Maintenance Fees using your card and will reduce the amount of credit you initially have available. For example, if you are assigned the minimum credit limit of $250, initial available credit will be only about $209. this credit card offer? •Annual Fee: $20 •Account Set-up Fee: $20 (one-time fee) The introductory rate Transaction Fees •Participation Fee: $12 annually ($1 per month) •Additional Card Fee: $5 annually (if applicable) • Balance Transfer: Either $5 or 3% of the amount of each transfer, whichever is depends on the • greater (maximum fee: $100) Cash Advance: Either $5 or 3% of the amount of each cash advance, whichever creditworthiness of the Penalty Fees • • is greater Foreign Transaction: 2% of each transaction in U.S. dollars Late Payment: $29 if balance is less than or equal to $1000 OR $35 if balance is applicant, but it will be • more than $1000 Over-the-limit: $29 12.99%, 13.99%, or 14.99% • Returned Payment: $35 * How We Will Calculate Your Balance: We use a method called “average daily balance (including new purchases).” * Loss of Introductory APR- We may end your introductory APR and apply the Penalty APR if you become more than 60 days late in paying your bill
  25. 25. Interest Rates and Interest Charges Annual Percentage 12.99%, 13.99% or 14.99%, introductory APR for one year, based on your Rate (APR) for creditworthiness.APR for Balance Transfers & Purchases APR for Balance After that, your APR will be 14.99%. This is a variable-rate APR that will vary with the market based on the Prime Rate. 15.99% Cash Advances Transfers APR for Cash Advances •This APR will vary with the market based on the Prime Rate 21.99% •This APR will vary with the market based on the Prime Rate•Balance transfer - act of Penalty APR and When it Applies 28.99% This APR may be applied to your account if you: 1.Make a late payment;transferring debt from one 2.Go over your credit limit; 3.Make a payment that is returned; or 4.Do any of the above on another account that you have with us.credit card to another How long will the Penalty APR apply? If your APR’s are increased for any of these reasons, the Penalty APR will apply until you make six consecutive minimum payments when due. How to Avoid Paying Your due date is at least 25 days after the close of each billing cycle. We will not charge Interest on you any interest on purchases if you pay your entire balance by the due date each Purchases month.•Cash advance includes Minimum Interest Charge For Credit Card Tips If you are charged interest, the charge will be no less than $1.50. To learn more about factors to consider when applying for or using a credit card, visit thewithdrawing cash from an from the Federal Reserve Board website of the Federal Reserve Board at http://www.federalreserve.gov/creditcard FeesATM using a credit card Set-up and Maintenance Fees NOTICE: Some of these set-up and maintenance fees will be assessed before you begin using your card and will reduce the amount of credit you initially have available. For example, if you are assigned the minimum credit limit of $250, initial available credit will be only about $209. •Annual Fee: $20 •Account Set-up Fee: $20 (one-time fee)•Balance transfer and cash •Participation Fee: $12 annually ($1 per month) •Additional Card Fee: $5 annually (if applicable) Transaction Fees • Balance Transfer: Either $5 or 3% of the amount of each transfer, whichever isadvance fees may also apply • greater (maximum fee: $100) Cash Advance: Either $5 or 3% of the amount of each cash advance, whichever is greater(even if the APR is 0%) Penalty Fees • • Foreign Transaction: 2% of each transaction in U.S. dollars Late Payment: $29 if balance is less than or equal to $1000 OR $35 if balance is more than $1000 • Over-the-limit: $29 • Returned Payment: $35 * How We Will Calculate Your Balance: We use a method called “average daily balance (including new purchases).” * Loss of Introductory APR- We may end your introductory APR and apply the Penalty APR if you become more than 60 days late in paying your bill
  26. 26. Interest Rates and Interest Charges Penalty APR and Annual Percentage Rate (APR) for 12.99%, 13.99% or 14.99%, introductory APR for one year, based on your creditworthiness. Purchases After that, your APR will be 14.99%. This is a variable-rate APR that will vary with the When it Applies APR for Balance market based on the Prime Rate. 15.99% Transfers •This APR will vary with the market based on the Prime RateDiscloses the penalty APR and APR for Cash Advances 21.99% •This APR will vary with the market based on the Prime Rate Penalty APR and 28.99%the penalty terms that trigger When it Applies This APR may be applied to your account if you: 1.Make a late payment; 2.Go over your credit limit; it to take effect 3.Make a payment that is returned; or 4.Do any of the above on another account that you have with us. How long will the Penalty APR apply? If your APR’s are increased for any of these reasons, the Penalty APR will apply until you make six consecutive minimum payments•Penalty APR - interest rate when due. How to Avoid Paying Your due date is at least 25 days after the close of each billing cycle. We will not charge Interest on you any interest on purchases if you pay your entire balance by the due date each Purchases month.charged on new transactions Minimum Interest Charge If you are charged interest, the charge will be no less than $1.50.if the penalty terms in the For Credit Card Tips To learn more about factors to consider when applying for or using a credit card, visit the from the Federal website of the Federal Reserve Board at http://www.federalreserve.gov/creditcard Reserve Boardcontract are triggered Fees Set-up and NOTICE: Some of these set-up and maintenance fees will be assessed before you begin Maintenance Fees using your card and will reduce the amount of credit you initially have available. For example, if you are assigned the minimum credit limit of $250, initial available credit will be only about $209. •Annual Fee: $20 •Account Set-up Fee: $20 (one-time fee) •Participation Fee: $12 annually ($1 per month) •Additional Card Fee: $5 annually (if applicable) What is the Penalty APR for this Transaction Fees • Balance Transfer: Either $5 or 3% of the amount of each transfer, whichever is greater (maximum fee: $100) • Cash Advance: Either $5 or 3% of the amount of each cash advance, whichever credit card offer? • is greater Foreign Transaction: 2% of each transaction in U.S. dollars Penalty Fees • Late Payment: $29 if balance is less than or equal to $1000 OR $35 if balance is 28.99% • more than $1000 Over-the-limit: $29 • Returned Payment: $35 * How We Will Calculate Your Balance: We use a method called “average daily balance (including new purchases).” * Loss of Introductory APR- We may end your introductory APR and apply the Penalty APR if you become more than 60 days late in paying your bill
  27. 27. it Card Cred Interest Rates and Interest Charges Annual Percentage 12.99%, 13.99% or 14.99%, introductory APR for one year, based on your Rate (APR) for creditworthiness. Purchases After that, your APR will be 14.99%. This is a variable-rate APR that will vary with the market based on the Prime Rate. APR for Balance 15.99% Transfers •This APR will vary with the market based on the Prime Rate APR for Cash 21.99% Advances •This APR will vary with the market based on the Prime Rate Penalty APR and 28.99% When it Applies This APR may be applied to your account if you: 1.Make a late payment; How To Avoid Paying 2.Go over your credit limit; 3.Make a payment that is returned; or 4.Do any of the above on another account that you have with us. Interest on Purchases How long will the Penalty APR apply? If your APR’s are increased for any of these reasons, the Penalty APR will apply until you make six consecutive minimum payments when due.•Explains how you can avoid How to Avoid Paying Interest on Purchases Your due date is at least 25 days after the close of each billing cycle. We will not charge you any interest on purchases if you pay your entire balance by the due date each month.interest charges by paying Minimum Interest If you are charged interest, the charge will be no less than $1.50. Charge For Credit Card Tips To learn more about factors to consider when applying for or using a credit card, visit thecredit card bills in full every from the Federal Reserve Board website of the Federal Reserve Board at http://www.federalreserve.gov/creditcard Feesmonth Set-up and Maintenance Fees NOTICE: Some of these set-up and maintenance fees will be assessed before you begin using your card and will reduce the amount of credit you initially have available. For example, if you are assigned the minimum credit limit of $250, initial available credit will be only about $209. •Annual Fee: $20 Minimum Interest Charge •Account Set-up Fee: $20 (one-time fee) •Participation Fee: $12 annually ($1 per month) •Additional Card Fee: $5 annually (if applicable)•Typically range from $0.50 • Transaction Fees Balance Transfer: Either $5 or 3% of the amount of each transfer, whichever is greater (maximum fee: $100) • Cash Advance: Either $5 or 3% of the amount of each cash advance, whicheverto $2 per month is greater • Foreign Transaction: 2% of each transaction in U.S. dollars Penalty Fees • Late Payment: $29 if balance is less than or equal to $1000 OR $35 if balance is more than $1000 • Over-the-limit: $29 • Returned Payment: $35 * How We Will Calculate Your Balance: We use a method called “average daily balance (including new purchases).” * Loss of Introductory APR- We may end your introductory APR and apply the Penalty APR if you become more than 60 days late in paying your bill
  28. 28. Credit cards may charge Interest Rates and Interest Charges many different types of Annual Percentage Rate (APR) for 12.99%, 13.99% or 14.99%, introductory APR for one year, based on your creditworthiness. fees Purchases After that, your APR will be 14.99%. This is a variable-rate APR that will vary with the market based on the Prime Rate. APR for Balance 15.99% Transfers •This APR will vary with the market based on the Prime Rate APR for Cash 21.99% Set-up and Maintenance Advances Penalty APR and When it Applies •This APR will vary with the market based on the Prime Rate 28.99% This APR may be applied to your account if you: Fees 1.Make a late payment; 2.Go over your credit limit; 3.Make a payment that is returned; or•Any set-up and 4.Do any of the above on another account that you have with us. How long will the Penalty APR apply? If your APR’s are increased for any of these reasons, the Penalty APR will apply until you make six consecutive minimum paymentsmaintenance fees for the How to Avoid Paying Interest on when due. Your due date is at least 25 days after the close of each billing cycle. We will not charge you any interest on purchases if you pay your entire balance by the due date eachcard Purchases Minimum Interest Charge month. If you are charged interest, the charge will be no less than $1.50. • Annual fee- a yearly For Credit Card Tips from the Federal Reserve Board To learn more about factors to consider when applying for or using a credit card, visit the website of the Federal Reserve Board at http://www.federalreserve.gov/creditcard fee that may be Set-up and Maintenance Fees Fees NOTICE: Some of these set-up and maintenance fees will be assessed before you begin using your card and will reduce the amount of credit you initially have available. For charged for having a example, if you are assigned the minimum credit limit of $250, initial available credit will be only about $209. •Annual Fee: $20 credit card •Account Set-up Fee: $20 (one-time fee) •Participation Fee: $12 annually ($1 per month) •Additional Card Fee: $5 annually (if applicable) Transaction Fees • Balance Transfer: Either $5 or 3% of the amount of each transfer, whichever is greater (maximum fee: $100) What is the annual fee • Cash Advance: Either $5 or 3% of the amount of each cash advance, whichever is greater • for this credit card? Foreign Transaction: 2% of each transaction in U.S. dollars Penalty Fees • Late Payment: $29 if balance is less than or equal to $1000 OR $35 if balance is more than $1000 • Over-the-limit: $29 $20 • Returned Payment: $35 * How We Will Calculate Your Balance: We use a method called “average daily balance (including new purchases).” * Loss of Introductory APR- We may end your introductory APR and apply the Penalty APR if you become more than 60 days late in paying your bill
  29. 29. it Card Cred Interest Rates and Interest Charges Annual Percentage 12.99%, 13.99% or 14.99%, introductory APR for one year, based on your Rate (APR) for creditworthiness. Purchases After that, your APR will be 14.99%. This is a variable-rate APR that will vary with the market based on the Prime Rate. APR for Balance 15.99% Transfers •This APR will vary with the market based on the Prime Rate APR for Cash 21.99% Advances •This APR will vary with the market based on the Prime Rate Penalty APR and 28.99% When it Applies This APR may be applied to your account if you: 1.Make a late payment; 2.Go over your credit limit; Transaction Fees 3.Make a payment that is returned; or 4.Do any of the above on another account that you have with us.•Discloses any transaction How long will the Penalty APR apply? If your APR’s are increased for any of these reasons, the Penalty APR will apply until you make six consecutive minimum payments when due. How to Avoid Paying Your due date is at least 25 days after the close of each billing cycle. We will not chargefees for the card Interest on Purchases you any interest on purchases if you pay your entire balance by the due date each month. Minimum Interest If you are charged interest, the charge will be no less than $1.50. • Balance transfer Charge For Credit Card Tips To learn more about factors to consider when applying for or using a credit card, visit the fees from the Federal website of the Federal Reserve Board at http://www.federalreserve.gov/creditcard Reserve Board Fees • Cash advance fees Set-up and NOTICE: Some of these set-up and maintenance fees will be assessed before you begin Maintenance Fees using your card and will reduce the amount of credit you initially have available. For example, if you are assigned the minimum credit limit of $250, initial available credit will • May be charged be only about $209. •Annual Fee: $20 •Account Set-up Fee: $20 (one-time fee) in addition to •Participation Fee: $12 annually ($1 per month) •Additional Card Fee: $5 annually (if applicable) Transaction Fees • Balance Transfer: Either $5 or 3% of the amount of each transfer, whichever is APR greater (maximum fee: $100) • Cash Advance: Either $5 or 3% of the amount of each cash advance, whichever is greater • Foreign Transaction: 2% of each transaction in U.S. dollars Penalty Fees • Late Payment: $29 if balance is less than or equal to $1000 OR $35 if balance is more than $1000 • Over-the-limit: $29 • Returned Payment: $35 * How We Will Calculate Your Balance: We use a method called “average daily balance (including new purchases).” * Loss of Introductory APR- We may end your introductory APR and apply the Penalty APR if you become more than 60 days late in paying your bill
  30. 30. Interest Rates and Interest Charges Penalty Fees Annual Percentage Rate (APR) for Purchases 12.99%, 13.99% or 14.99%, introductory APR for one year, based on your creditworthiness. After that, your APR will be 14.99%. This is a variable-rate APR that will vary with the•Discloses the penalty fees for APR for Balance market based on the Prime Rate. 15.99% Transfers •This APR will vary with the market based on the Prime Ratethe card (in addition to Penalty APR for Cash Advances Penalty APR and 21.99% •This APR will vary with the market based on the Prime Rate 28.99%APR) When it Applies This APR may be applied to your account if you: 1.Make a late payment; 2.Go over your credit limit; • Late-payment- charged 3.Make a payment that is returned; or 4.Do any of the above on another account that you have with us. How long will the Penalty APR apply? If your APR’s are increased for any of these when a cardholder does How to Avoid Paying reasons, the Penalty APR will apply until you make six consecutive minimum payments when due. Your due date is at least 25 days after the close of each billing cycle. We will not charge not make the minimum Interest on Purchases Minimum Interest you any interest on purchases if you pay your entire balance by the due date each month. If you are charged interest, the charge will be no less than $1.50. monthly payment by the Charge For Credit Card Tips To learn more about factors to consider when applying for or using a credit card, visit the from the Federal website of the Federal Reserve Board at http://www.federalreserve.gov/creditcard due date Reserve Board Fees • Over-the-limit-charged Set-up and NOTICE: Some of these set-up and maintenance fees will be assessed before you begin Maintenance Fees using your card and will reduce the amount of credit you initially have available. For example, if you are assigned the minimum credit limit of $250, initial available credit will if the account balance be only about $209. •Annual Fee: $20 •Account Set-up Fee: $20 (one-time fee) goes over the set credit •Participation Fee: $12 annually ($1 per month) •Additional Card Fee: $5 annually (if applicable) Transaction Fees • Balance Transfer: Either $5 or 3% of the amount of each transfer, whichever is limit greater (maximum fee: $100) • Cash Advance: Either $5 or 3% of the amount of each cash advance, whichever is greater • Foreign Transaction: 2% of each transaction in U.S. dollars Penalty Fees • Late Payment: $29 if balance is less than or equal to $1000 OR $35 if balance is more than $1000 • Over-the-limit: $29 • Returned Payment: $35 * How We Will Calculate Your Balance: We use a method called “average daily balance (including new purchases).” * Loss of Introductory APR- We may end your introductory APR and apply the Penalty APR if you become more than 60 days late in paying your bill
  31. 31. it Card Cred Interest Rates and Interest Charges Annual Percentage 12.99%, 13.99% or 14.99%, introductory APR for one year, based on your Rate (APR) for creditworthiness. Purchases After that, your APR will be 14.99%. This is a variable-rate APR that will vary with the market based on the Prime Rate. APR for Balance 15.99% Transfers •This APR will vary with the market based on the Prime Rate APR for Cash 21.99% Advances •This APR will vary with the market based on the Prime Rate Penalty APR and 28.99% When it Applies This APR may be applied to your account if you: 1.Make a late payment; 2.Go over your credit limit; How we calculate your 3.Make a payment that is returned; or 4.Do any of the above on another account that you have with us. How long will the Penalty APR apply? If your APR’s are increased for any of these balance How to Avoid Paying reasons, the Penalty APR will apply until you make six consecutive minimum payments when due. Your due date is at least 25 days after the close of each billing cycle. We will not charge•Credit card companies can Interest on Purchases Minimum Interest you any interest on purchases if you pay your entire balance by the due date each month. If you are charged interest, the charge will be no less than $1.50.use one of several methods to Charge For Credit Card Tips from the Federal To learn more about factors to consider when applying for or using a credit card, visit the website of the Federal Reserve Board at http://www.federalreserve.gov/creditcardcalculate the outstanding Reserve Board Set-up and Fees NOTICE: Some of these set-up and maintenance fees will be assessed before you beginbalance on a credit card Maintenance Fees using your card and will reduce the amount of credit you initially have available. For example, if you are assigned the minimum credit limit of $250, initial available credit will be only about $209. •Annual Fee: $20 •Account Set-up Fee: $20 (one-time fee) What method is used to calculate Transaction Fees •Participation Fee: $12 annually ($1 per month) •Additional Card Fee: $5 annually (if applicable) • Balance Transfer: Either $5 or 3% of the amount of each transfer, whichever is the balance on this card? • greater (maximum fee: $100) Cash Advance: Either $5 or 3% of the amount of each cash advance, whichever is greater Average daily balance Penalty Fees • • Foreign Transaction: 2% of each transaction in U.S. dollars Late Payment: $29 if balance is less than or equal to $1000 OR $35 if balance is (including new purchases) more than $1000 • Over-the-limit: $29 • Returned Payment: $35 * How We Will Calculate Your Balance: We use a method called “average daily balance (including new purchases).” * Loss of Introductory APR- We may end your introductory APR and apply the Penalty APR if you become more than 60 days late in paying your bill
  32. 32. Interest Rates and Interest Charges Loss of Introductory APR Annual Percentage Rate (APR) for Purchases 12.99%, 13.99% or 14.99%, introductory APR for one year, based on your creditworthiness. After that, your APR will be 14.99%. This is a variable-rate APR that will vary with the If the card has an APR for Balance Transfers market based on the Prime Rate. 15.99% •This APR will vary with the market based on the Prime Rateintroductory rate, this area APR for Cash Advances Penalty APR and 21.99% •This APR will vary with the market based on the Prime Rate 28.99% will list how the lower When it Applies This APR may be applied to your account if you: 1.Make a late payment; 2.Go over your credit limit; introductory rate can be 3.Make a payment that is returned; or 4.Do any of the above on another account that you have with us. How long will the Penalty APR apply? If your APR’s are increased for any of these lost How to Avoid Paying reasons, the Penalty APR will apply until you make six consecutive minimum payments when due. Your due date is at least 25 days after the close of each billing cycle. We will not charge Interest on you any interest on purchases if you pay your entire balance by the due date each Purchases month.How can the introductory APR be Minimum Interest Charge If you are charged interest, the charge will be no less than $1.50. lost on this card? For Credit Card Tips from the Federal To learn more about factors to consider when applying for or using a credit card, visit the website of the Federal Reserve Board at http://www.federalreserve.gov/creditcard Reserve Board If the cardholder is more than Set-up and Fees NOTICE: Some of these set-up and maintenance fees will be assessed before you begin Maintenance Fees using your card and will reduce the amount of credit you initially have available. For 60 days late in paying the bill example, if you are assigned the minimum credit limit of $250, initial available credit will be only about $209. •Annual Fee: $20 What APR will the •Account Set-up Fee: $20 (one-time fee) •Participation Fee: $12 annually ($1 per month) •Additional Card Fee: $5 annually (if applicable) cardholder be charged if the Transaction Fees • Balance Transfer: Either $5 or 3% of the amount of each transfer, whichever is greater (maximum fee: $100) introductory rate is lost? • Cash Advance: Either $5 or 3% of the amount of each cash advance, whichever is greater • Foreign Transaction: 2% of each transaction in U.S. dollars Penalty Fees • Late Payment: $29 if balance is less than or equal to $1000 OR $35 if balance is The Penalty APR of 28.99% • more than $1000 Over-the-limit: $29 • Returned Payment: $35 * How We Will Calculate Your Balance: We use a method called “average daily balance (including new purchases).” * Loss of Introductory APR- We may end your introductory APR and apply the Penalty APR if you become more than 60 days late in paying your bill
  33. 33. 1.4.1.G1 ard rd die C a eCrt dit C Credit Card ChaosCr Activity Directions: 1.Two credit card terms will be provided 2.Identify which term is true on your credit card offer 3.Move to the correct side of the room indicated by the arrow on the slide © Family Economics & Financial Education – Updated May 2011 – Credit Unit – Understanding a Credit Card – Slide 33 Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences Take Charge America Institute at The University of Arizona
  34. 34. 1.4.1.G1 ard rd die C a eCrt dit C Credit Card ChaosCr Does your credit card offer have a: Fixed-rate Variable-rate APR for OR APR for Purchases Purchases © Family Economics & Financial Education – Updated May 2011 – Credit Unit – Understanding a Credit Card – Slide 34 Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences Take Charge America Institute at The University of Arizona
  35. 35. 1.4.1.G1 ard rd die C a eCrt dit C Credit Card ChaosCr Does your credit card offer have a: APR for APR for Purchases greater than or OR Purchases less than 15% equal to 15% © Family Economics & Financial Education – Updated May 2011 – Credit Unit – Understanding a Credit Card – Slide 35 Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences Take Charge America Institute at The University of Arizona
  36. 36. 1.4.1.G1 ard rd die C a eCrt dit C Credit Card ChaosCr Does your credit card offer have an Introductory Rate? No Introductory Introductory Rate OR Rate © Family Economics & Financial Education – Updated May 2011 – Credit Unit – Understanding a Credit Card – Slide 36 Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences Take Charge America Institute at The University of Arizona

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