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Credit

Credit. What do you think?. Nearly ___% of teens owe money to either a person or company, with an average debt of $___. About ____% of teens age 16-18 already have more than $1,000 in debt. ___% of teens say they understand how credit card interest and fees work.

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Credit

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  1. Credit

  2. What do you think? • Nearly ___% of teens owe money to either a person or company, with an average debt of $___. • About ____% of teens age 16-18 already have more than $1,000 in debt. • ___% of teens say they understand how credit card interest and fees work. • ___% of teens say they know how to establish good credit.

  3. What is Credit? • Credit means that someone will loan you money in exchange for your promise to repay it, usually with interest. • Reminder: Interest is the amount you pay to use someone else’s money. • The money that someone is willing to loan you is called the Principle.

  4. Types of Credit • Credit Card • Installment Loan • Student Loan • Mortgage

  5. Things to keep in mind • Annual Percentage Rate (APR) • Annual Fees • Credit Limit • Finance Charge • Origination Fee • Loan Term • Grace Period • Over-the-limit fees and Late Fees • Read the Small Print!

  6. Credit: the good • Convenience • Protection • Emergencies • Opportunity to build Credit • Quicker Gratification • Special Offers • Bonuses

  7. Credit: the Bad • INTEREST!!! • Overspending • Debt • Identity Theft

  8. 4 C’s of Credit • Collateral • Capital • Capacity • Character

  9. Credit Score • A Credit Score is a number that reflects your credit worthiness. • There are 3 agencies in which one can receive a credit report: • Equifax, Experian, and TransUnion

  10. Making your credit score go UP • Pay bills on time! • Make regular deposits into a savings account. • Minimize the number of Credit Cards. • Make small purchases and pay them off.

  11. Bringing your score DOWN • Making late payments. • Bouncing Checks • Having too many Credit Cards • Maintaining high balances on your Credit Cards • Changing Credit Cards frequently

  12. 70-20-10 Rule • Good way to keep Debt in check. • Spend 70% of your income on living expenses. • Spend 20% in Savings. • Use the Remaining 10% to pay off debt.

  13. How to avoid Credit Problems • Read the fine print. • Be choosy about your Credit Cards. • Pay as much as you can every month. • Pay your bills before they are due. • Set up automatic payments if possible. • Save, Save, Save.

  14. Bankruptcy • Chapter 7 – allows you to erase most of your debt. To qualify, you typically must be unemployed or have a very low income. You must also undergo financial counseling as part of the process. • Chapter 13 – allows you to repay many of your debts over a period of time, usually no more than 5 years. A court typically oversees the repayment plan to make sure that you do.

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