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2/12/14 “Credit”

2/12/14 “Credit” Imagine you “need” $100 right now to buy a suit/dress for the S’winter Ball (which you are going to, duh!). Would you take the following option if it was the only way to get a suit/dress? Why or why not?

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2/12/14 “Credit”

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  1. 2/12/14 • “Credit” • Imagine you “need” $100 right now to buy a suit/dress for the S’winter Ball (which you are going to, duh!). Would you take the following option if it was the only way to get a suit/dress? Why or why not? • A friend offers you $100 now, and you can pay them back $20 a month for 6 months. • On desk: Compound v. Simple Interest wksht.

  2. 2/12/14 Econ. Agenda Credit & credit cards! (class notes) Which credit card is right for you? (research) HW: Finish credit card research

  3. 2/12/14 Class notes – credit cards Credit: a loan to another party with the promise of reimbursement Receiving credit… Giving credit…

  4. 2/12/14 Class notes – credit cards • What is a credit card? • allow you to buy items without spending any money at the time of purchase • Example: Harrison wants to purchase Chrissy an engagement ring for $2,500, but he is broke. So, he buys her one with a credit card instead. • + = • broke Harrison credit card ring

  5. 2/12/14 Class notes – credit cards How do credit cards work? You purchase item with credit card. Credit card company pays for it. You pay back credit card company over time (with interest, of course!) • Disadvantages: • Interest = higher cost of items • Additional fees for card • Can create serious financial difficulties • Advantages: • Don’t need $$ to buy • Don’t need to carry cash • Creates record of purchases & your ability to pay bills (credit history)

  6. 2/12/14 Class notes – credit cards • Which credit card is right for me? • Factors to consider: • APR (annual percentage rate): interest charged by credit card company per year • Annual fees: cost of having credit card per year • Late fees: pay a bill late • Intro. APR: usually LOW APR for certain amount of time when you first get card • Regular APR: APR after intro. rate is over -- usually much higher • Fixed or variable APR: fixed stays the same, variable changes • Credit limit: amount of $$ you are allowed to spend on card

  7. 2/12/14 Class notes – credit cards • Which credit card is right for me? • Factors to consider: • Benefits or Rewards: • Cash back: % of total amount of your purchases that credit card company will “give back” to you • Example: Bank of America offers 3% cash back on groceries. • You spend $100 on groceries. • BoA gives you $3 back. • “Miles” or “Points”: build up miles or points by spending; cash them in later for “freebies” (cash back, airline miles, gifts, etc.)

  8. 2/12/14 • To – Do: • Research different types of credit cards. See which one might be right for you! • www.bankrate.com • Types of cards for STUDENTS, BAD CREDIT, LOW-INTEREST, REWARDS… • 5 different cards

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