1 / 5

Credit

Credit. Credit: buying goods or services or borrowing money in exchange for a promise to pay in the future Creditors: people who lend money Debtors: people who owe the money Finance charge: money paid for using the credit Interest rate: percentage charged per month for credit

snana
Télécharger la présentation

Credit

An Image/Link below is provided (as is) to download presentation Download Policy: Content on the Website is provided to you AS IS for your information and personal use and may not be sold / licensed / shared on other websites without getting consent from its author. Content is provided to you AS IS for your information and personal use only. Download presentation by click this link. While downloading, if for some reason you are not able to download a presentation, the publisher may have deleted the file from their server. During download, if you can't get a presentation, the file might be deleted by the publisher.

E N D

Presentation Transcript

  1. Credit • Credit: buying goods or services or borrowing money in exchange for a promise to pay in the future • Creditors: people who lend money • Debtors: people who owe the money • Finance charge: money paid for using the credit • Interest rate: percentage charged per month for credit • penalty charge: covers costs to seller in case of late payments

  2. Two Types of Credit • Unsecured credit: credit based on promise to repay with no other backup • ex: credit card • most credit cards have limits (better credit leads to higher limit) • don’t have to pay off full amount each month, but they do have minimums you must pay – finance charge • different companies charge different interest rates • Annual percentage rate (APR): the percentage cost of credit on a yearly basis • Some companies charge on based on date of transaction • Some companies charge on amount left over after billing period • Some companies charge annual fee • 18% yearly interest=1.5% interest monthly • ATM/debit card: : card that allows holder to draw money directly from account • Secured credit: credit based on promise and backup property • collateral: property of value put forward in exchange for credit • If debtor defaults the creditor can TAKE collateral

  3. Default: Not paying back loansWhat can your creditor do? • Practice: hire outside collection agencies to get the money • Practice: calls and letters • restriction: can’t be harassing • if harassing, contact consumer protection agency and demand all contacts stop • Practice: repossession: taking back of collateral • only applies to secured credit • restriction: can not use violence to repossess • Practice: court action • usually last resort because it costs the creditor more • default judgement: a judgment in favor of creditor because defendant didn’t show up (regardless who is right)

  4. Default: Not paying back loansWhat can your creditor do? • Practice: garnishment: court order forcing debtor’s employer to withhold part of debtor’s wages and pay it directly to creditor • only after a court action in favor of creditor • restriction: Wage Garnishment Act: act limiting garnished amount to 25% of pay after taxes • also federal employees, people on welfare or unemployment can not have wages garnished • also employers can not fire based on garnishment • Practice: attachment: court order forcing a bank to pay creditor from debtor’s bank account • also allows court to seize debtor’s property and sell it to pay off debt

  5. Bankruptcy: procedure in which debtor places all assets under control of federal court • Two types • Chapter 13: debtor can pay off some or all of debt over extended period of time under court supervision • Chapter 7: court seizes all assets and sells them to pay off debt • Usually assets do not cover all debt • Record of bankruptcy stays on credit report for 10 years (everything else is 7) • credit report: report of a person’s entire credit history; used by companies to determine if future credit will be given • Debt from taxes, child support, student loans can not be wiped out

More Related