C'A'R'E'

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C.A.R.E.

• Credit Abuse Resistance
• Education Program

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C.A.R.E.A Program of

• U.S. Bankruptcy Courts of West Virginia
• The West Virginia State Bar
• The WV Bankruptcy Law Committee

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C.A.R.E.

• The C.A.R.E. program was founded by the Honorable
  John C. Ninfo, II, Bankruptcy Judge for the
  Western District of New York.
• As of March 2007, the C.A.R.E. program is in 39
  states and the District of Columbia.

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C.A.R.E.
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A Word from Judge Ninfo

• It is the hope of the program that students will
  not go down the road of consumer credit abuse
  once they understand
• (1) the true cost of consumer credit
• (2) how difficult it is to repay consumer debt
  incurred to buy and do things that you really
  cant afford and dont need

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A Word from Judge Ninfo

• (3) the many consequences of financial problems,
  which are becoming more numerous and serious
• (4) the need to have savings and how to
  effectively budget with a view towards needs
  versus wants

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A Word from Judge Ninfo

• (5) that just maintaining debt is not being able
  to afford it, affording debt is being able to pay
  it back and
• (6) it is better to live consumer debt free.

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The Need for Credit Education

• 68 of teens report that they have not had a
  meaningful discussion about responsible credit
  card use with their parents.
• 31 of teens, 18-19 years of age, have credit
  cards in their own name.
• 71 of young adult cardholders revolve their
  balances compared to 55 of all cardholders.

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The Need for Credit Education

• People under the age of 25 are one of the fastest
  growing groups of bankruptcy filers.
• One out of five young adult households are in
  debt hardship meaning that over 40 of their
  income goes to debt payments each month.
• In the last decade, young adults (ages 18-24) saw
  credit card debt increase 104.

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The Need for Credit Education

• Graduating college students average 20,402 of
  debt - 3,262 of that is credit card debt.

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The Need for Credit Education

• 18 is the current average starting interest rate
  for students and young adults.

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The Cost of Credit Card Debt
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Paying Interest Less Savings

• 43 of Americans spend more than they make, and
  in 2005, for the first time since the Great
  Depression, our savings rate in this country was
  negative.

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The Cost of Credit Card Debt

• An American consumer with 10,000 in credit card
  debt, paying an average interest rate of 14 will
  pay 117 per month in interest alone.

• If they could invest that same amount each month
  of their work life (approximately 40 years), it
  would grow to 307,103 (assuming a 7 return).

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Making the Minimum Payment

• Paying the minimum monthly payment on 2,000 with
  a 31 interest rate will take 15.6 years to pay
  off the debt at a total cost of 5,348.15,
  including 3,348.15 in interest.

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The Cost of Credit Card Debt

• Minimum Payment vs. Fixed Payment
• (2,000 at 18 Interest)

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Cash vs. Credit
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The Importance of Good Credit
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The Importance of Good Credit

• Your history of payments, employment, and salary
  makes you a good candidate for a loan.

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Better Loan Terms
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The Importance of Good Credit

• You will be viewed as financially trustworthy and
  given better loan terms.
• It may help you rent an apartment and obtain
  employment most landlords and prospective
  employers will look at your credit report.

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Consequences of Credit Abuse

• Credit abuse may make it impossible to complete a
  degree.
• Denial of employment, credit, student loans, or
  leases. Higher interest rates and higher
  insurance rates.
• Bad credit rating.
• Emotional stress, divorce, and family problems.
• Bankruptcy.

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Avoiding Credit Abuse

• Distinguish between wants and needs.
• Have only one credit card. Opt for a low credit
  limit on that one card.
• Pay off your balance each month.
• Never make only the minimum payment.

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Bringing C.A.R.E. to Your Classroom

• Please visit the C.A.R.E. website at
  www.careprogram.us