Personal money mgmt credit cards


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Managing your credit cards can be important in your quest to be responsible with your money. Floyd Saunders' Personal Money Management Workshop provides an introduction to managing your money and is targeted to college students and the first time user of credit cards. The workshop includes a leader's guide and student workbook, contact Floyd Saunders for details.

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Personal money mgmt credit cards

  1. 1. Unit Five: Credit Cards Personal Money Management June 2012Saunders Learning Group, LLC, Andover, KS
  2. 2. Topics Applying for a Credit Card Types of Credit Cards Credit Card Finance Charges Reading Your Credit Card Statements Managing Credit Card Debt Your Responsibilities and Rights Knowing How Much You Can AffordSaunders Learning Group, LLC, Andover, KS
  3. 3. Training from Saunders Learning Group Saunders Learning Group provides a variety of training programs, workshops and seminars targeted to the financial services industry. Programs are available in a wide range of topics, and we are specialists in developing custom programs that are targeted to your needs. Contact the founder, Floyd Saunders at 316-680-6482 or at for more information. Saunders Learning Group, LLC, Andover, KS3
  4. 4. Welcome IntroductionsSaunders Learning Group, LLC, Andover, KS
  5. 5. applying for a credit cardcosts: Annual Percentage Rate (APR) Grace period Annual fees Transaction fees Balancing computation method for the finance chargefeatures: Credit limit How widely the card is accepted What services and features are available Saunders Learning Group, LLC, Andover, KS
  6. 6. comparing credit cards Type of account Annual fee Grace period Annual Percentage Rate (APR) Credit limit Minimum monthly payment Finance charge calculation method Late payment fee, other fees Other features college – lesson 5 - slide 5-D Saunders Learning Group, LLC, Andover, KS
  7. 7. Types of Credit Cards Saunders Learning Group, LLC, Andover, KS
  8. 8. Types of Credit CardsSaunders Learning Group, LLC, Andover, KS
  9. 9. Types of Credit CardsSaunders Learning Group, LLC, Andover, KS
  10. 10. Types of Credit CardsSaunders Learning Group, LLC, Andover, KS
  11. 11. calculating finance chargesaverage daily balance:You pay interest on the average balance owed during the billing cycle. The creditor figures thebalance in your account on each day of the billing cycle, then adds together these amounts anddivides by the number of days in the billing cycle.adjusted balance:You pay interest on the opening balance after subtracting the payment or returns made during themonth.previous balance:You pay interest on the opening balance, regardless of payments made during the month.past-due balance:No finance charge is added if the full payment is received within the grace period. If it is notreceived, a finance charge for the unpaid amount is added on to your next bill. college – lesson 5 - slide 5-B Saunders Learning Group, LLC, Andover, KS
  12. 12. examples of finance charges average adjusted previous daily balance balance balancemonthly 1.5% 1.5% 1.5%rates 18% 18% 18%previous balance $400 $400 $400payments $300 $300 $300On 15th day (new balance =$100)average daily balance $250* N/A N/A $3.75 $1.50 $6.00finance charge (1.5% x $250) (1.5% x $100) (1.5% x $400)* To figure average daily balance:($400 x 15 days) + ($100 x 15 days) = $250 x 30 daysSaunders Learning Group, LLC, Andover, KS
  13. 13. what to do if you’re denied creditif you think the reasons for the denial are valid: Ask the creditor if you can provide additional information or arrange alternate credit terms. Apply to another creditor whose standards may be different. Do the things you need to do to improve your creditworthiness (pay bills on time, increase income, reduce spending, obtain a secured card, etc.) and then reapply.if you are not sure whether the reason for the denial is valid: Ask the creditor to explain why you were denied. Review your credit history. If you find your credit history contains errors, take steps to correct the errors.if you believe the reason for the denial is invalid and that the creditorhas discriminated against you: Notify the federal enforcement agency whose name you were given by the creditor. The federal enforcement agency will investigate and report back to you. If you can afford it, hire an attorney to file suit against the creditor. If the court determines the creditor did discriminate, the creditor will be required to pay you actual damages plus punitive damages. Saunders Learning Group, LLC, Andover, KS
  14. 14. reading acredit cardstatementSaunders Learning Group, LLC, Andover, KS
  15. 15. dealing with billing errorsfair credit billing act (1974) Sets up a procedure for the quick correction of mistakes that appear on consumer credit accounts. You can challenge a billing statement for errors such as charges for unauthorized purchases, charges for items that were never delivered, failure to credit a payment, etc. You must notify the creditor of a disputed item within 60 days. Creditor must investigate and, within two billing periods, either correct the mistake or explain why the charge is not in error. You cannot be billed for or forced to pay the disputed amount until the creditor has finished the investigation. If it is determined that you are responsible for the bill, you must be given the usual amount of time to pay it. Your credit history is protected during the dispute process. Creditor must supply customers with a statement of their rights at the time the account is opened and at least twice a year thereafter.Saunders Learning Group, LLC, Andover, KS
  16. 16. other credit card protectionsprompt credit for payment A card issuer must credit your account on the day the issuer receives your payment, unless the payment is not made according to the creditor’s requirements.refunds of credit balances When you return merchandise or pay more than you owe, you have the option of keeping the credit balance on your account or receiving a refund.unauthorized charges If you report your card lost before it is used, you cannot be held responsible for any unauthorized charges. If your card is used before you report it lost, you are liable for $0 if reported within two business days. After that, you’re liable for no more than $50.00.disputes about merchandise or services In some circumstances, you have the right to withhold payment for unsatisfactory merchandise or services.Saunders Learning Group, LLC, Andover, KS
  17. 17. credit card do’s and don’tsshop around Look at various and understand the contract Read the contract carefully. Don’t rush into signing anything. Once a contract is signed, get a copy of it. Know the penalties for missed payments.know your cost Figure out total price when paying with credit. Make the largest payments possible. Know the penalties for missed payments. Buy on installment credit only after you have evaluated all other possibilities. Don’t be misled into thinking small payments will be easy. Saunders Learning Group, LLC, Andover, KS
  18. 18. the three Cs of creditcharacter—will you repay the debt?From your credit history, does it look like you possess the honesty and reliability to pay credit debts? Have you used credit before? Do you pay your bills on time? Do you have a good credit report? Can you provide character references? How long have you lived at your present address? How long have you been at your present job?capital—what if you don’t repay the debt?Do you have any valuable assets such as real estate, savings, or investments that could be used torepay credit debts if income is unavailable? What property do you own that can secure the loan? Do you have a savings account? Do you have investments to use as collateral?capacity—can you repay the debt?Have you been working regularly in an occupation that is likely to provide enough income to supportyour credit use? Do you have a steady job? What is your salary? How many other loan payments do you have? What are your current living expenses? What are your current debts? How many dependents do you have? Saunders Learning Group, LLC, Andover, KS
  19. 19. your responsibilities Borrow only what you can repay. Read and understand the credit contract. Pay debts promptly. Notify creditor if you cannot meet payments. Report lost or stolen credit cards promptly. Never give your card number over the phone unless you initiated the call or are certain of the caller’s identity.Saunders Learning Group, LLC, Andover, KS
  20. 20. your rightstruth in lending act (1968)Ensures consumers are fully informed about cost and conditions ofborrowing.fair credit reporting act (1970)Protects the privacy and accuracy of information in a credit check.equal opportunity act (1974)Prohibits discrimination in giving credit on the basis of sex, race, color,religion, national origin, marital status, age, or receipt of public assistance.fair credit billing act (1974)Sets up a procedure for the quick correction of mistakes that appear onconsumer credit accounts.fair debt collection practices act (1977)Prevents abuse by professional debt collectors, and applies to anyoneemployed to collect debts owed to others; does not apply to banks or otherbusinesses collecting their own accounts. college – lesson 4 - slide 4-D Saunders Learning Group, LLC, Andover, KS
  21. 21. how much can you afford? (the 20-10 rule)never borrow more than 20% of your yearly net income If you earn $800 a month after taxes, then your net income in one year is: 12 x $800 = $9,600 Calculate 20% of your annual net income to find your safe debt load. $9,600 x 20% = $1920 So, you should never have more than $1920 of debt outstanding. Note: Housing debt (i.e., mortgage payments) should not be counted as part of the 20%, but other debt should be included, such as car loans, student loans and credit cards.monthly payments shouldn’t exceed 10% of your monthly net income If your take-home pay is $800 a month: $800 x 10% = $80 Your total monthly debt payments shouldn’t total more than $40 per month. Note: Housing payments (i.e., mortgage payments) should not be counted as part of the 10%, but other debt should be included, such as car loans, student loans and credit cards. college – lesson 4 - slide 4-I Saunders Learning Group, LLC, Andover, KS
  22. 22. QuestionsSaunders Learning Group, LLC, Andover, KS
  23. 23. Post Workshop Action Plan  Complete the Post Workshop Action PlanSaunders Learning Group, LLC, Andover, KS 23
  24. 24. About the Presenter  Floyd Saunders has worked on Wall Street with both Bank of America and JPMorgan, where is was a vice president in global financial systems. He has worked across the industry in retail, commercial, and investment banking.  He has taught courses in Money and Banking, Principles of Banking, Managerial Finance and extensively for the American Institute of Banking and various colleges.  As a consultant, he developed and taught a wide range of banking and investing courses.  He authored three programs for the American Bankers Association: Banking on Mutual Funds and Annuities, Introduction to Securities Markets and Investing in Securities.  He is the author of “Figuring Out Wall Street, a consumer’s guide to financial makets”  Look for his next book, “Family Financial Freedom” available as an e-book soon.Saunders Learning Group, LLC, Andover, KS