Credit and Debt

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Staying on Good Terms Managing Creditand Debt
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(No Transcript)
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The Upside of Credit Use

• Buy/consume now, pay later
• Establish favorable credit history
• Protect against fraud
• Cope with emergencies

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The Downside of Credit Use

• The price of credit is high KNOW the APR!
• Additional fees add to the cost
• Credit makes it easy to overspend
• You are vulnerable to fraud

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College Students and Credit What We Know

• 84 have at least one credit card
• Half have 4 or more credit cards
• Average outstanding balance of 3,173
• 89 incurred finance charges by carrying a
  balance
• 55 of Georgia college students had debt, an
  average of 17,296 74 of graduating seniors had
  debt
• Parents are borrowing too

Sources Project on Student Debt, Sallie Mae
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All Cards Are NOT Created Equal

• Credit
• Credit Cards
• Charge Card
• Debit
• ATM Card
• Check Card

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• Other Types of Plastic Cards
• Stored Value Card
• Smart Cards

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Credit Card Accountability, Responsibility, and
Disclosure (The CARD) Act of 2009

• Restrictions on interest rate increases on
  existing debt
• Restrictions on late fees
• Eliminates universal default
• Statements must go out 21 calendar days in
  advance of the due date
• 45 day notice on rate hikes

http//financialtip.blogspot.com/2009/05/credit-ca
rd-reform.html
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Credit Card Accountability, Responsibility, and
Disclosure (The CARD) Act of 2009

• Eliminates fees for processing payments
• Eliminates over-the-limit fees
• Unless consumer asks for account to allow
  over-the-limit transactions
• Rates cant be raised for the first year after
  account is opened
• Unless creditor uses a promotional rate
• Reasonable payment allocation
• Apply payments to highest rates
• Mandatory 5 year life for gift cards

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Credit Card Reform, Continued

• Among other provisions, those younger than 21
  wont be able to get a credit card unless
• A parent or guardian co-signs OR
• The young adult can prove s/he has independent
  means to make payments
• Permission from co-signer required to increase
  credit limits

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Credit Card Reform, Continued

• Prohibits card issuers from offering freebies
  like food or trinkets when marketing on campus
• Stops prescreened credit card offers for
  consumers under 21

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Credit Myths

• Once paid, bad debt will go away
• Im not responsible for debts on joint accounts
  or co-signed accounts if they arent my
  purchases
• Credit is what got me into this mess
• Credit card companies wouldnt send me offers if
  I couldnt afford it
• If I dont use credit, I wont be able to buy
  anything

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Ten Credit Mistakes

• Overspending
• Holding too many credit cards
• Making only minimum payments
• Carrying a permanent balance
• Assuming low interest rates stay the same

Continue...
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Ten Credit Mistakes

• Paying a higher interest rate than necessary
• Paying extra for incentive credit cards
• Not reading the disclosure statement
• Paying off the wrong credit cards first
• Ignoring extra fees or penalties

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Beware of Higher Cost Credit

• Tax Refund Loans
• Rent-to-Own
• Car Title Loans
• Bounced Check Protection

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Signs of Credit Trouble

• Maxing out credit cards
• Using one card to pay the balance on another
• Not knowing your total debt
• Borrowing from family members to pay debt
• Getting frequent cash advances

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Staying Out of Credit Card Trouble

• Shop for the credit card with the best terms.
  Consider - Annual Fee - APR - Rewards
  Program
• Dont charge perishable items
• Pay off as much as possible every month

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Pay As Much As You Can!Balance 3,000 Interest
Rate 18
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Timing Makes a Difference

• Dont buy on impulse
• Notify your creditors if you cant make your
  payments on time
• Report lost/stolen cards immediately

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Other Credit Card Management Suggestions

• Store your credit cards in a safe place
• Report lost/stolen cards immediately
• Fair Credit Billing Act limits liability on your
  credit card to 50.
• Track your charges
• Document your concerns in writing
• Talk to your creditor
• ask them to lower your credit limit
• ask them to change when your bill is due

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Credit and Debt Counseling Services

• Budget Counseling
• Debt Repayment Plan
• You agree to not use the cards
• The debt counselor may arrange for you to make
  smaller payments and pay less interest and fees.
• You pay the debt counselor who pays your
  creditors
• The debt counselor will not put the repayment
  plan on your credit report BUT creditors may

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For individual help with serious debt problems,
contact CredAbility www.CredAbility.org 800-251-C
CCS
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For more information, contact The Peer
Financial Counseling Program (insert web address,
phone number, and/or e-mail)
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Special Thanks to...