Credit Cards: The Good, the Bad, and The Money

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Credit Cards The Good, the Bad, and The Money!

• Presented By
• The Credit-Wise Cats

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Credit Cards The Good

• Today well talk about
• What are credit cards
• Advantages and disadvantages
• Shopping around for a card
• Tips on guarding your credit
• Your rights

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What is a Credit Card?

• Plastic, rectangular object w/numbers that
  represent a clients account.
• Used to buy goods and services based on the
  intent to pay back (a.k.a. an IOU card).
• Not real money
• Fast cash

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History of Credit Cards

• 1950 Diners Club and American Express launched
  the credit card campaign in the United States.
• 1951 1st credit cards were issued to 200
  customers in NY to use at 27 restaurants.
• 1970 magnetic strip is added to cards and are
  now electronically tracked.

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How Do Credit Cards Work?

• Tracked electronically by the magnetic strip
• Good/service purchased is tracked by the account
  number on card
• Money from issuer is paid to the merchant, the
  customer then pays the issuer
• Interest is collected from customer as a fee for
  using the credit card

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Advantages

• Fast
• Convenient
• Track expenditures
• Safer than cash
• Pay by installments
• Build credit history
• Accepted more than ever!

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Disadvantages

• Interest rate are relatively expensive
• Charge miscellaneous Fees
• Liquidity is expansive
• One tends to live beyond ones means
• Can destroys your credit history
• Companies do not explain rules

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Before you apply, ask yourself

• How do I plan on using this credit card?
• Do I plan on paying off my bill every month or
  will I carry a balance?
• Will I use the cash advance option?
• Whats more important, a low APR or a low annual
  fee?

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Which Card Do I Get?

• Standard- most common card available.
• Platinum/Gold- card available for higher income
  clients and usually have bonuses attached to
  them.
• Charity/Affinity- operates like standard cards,
  but donates a small percentage to the affiliated
  organization.
• Loyalty- card that offers incentives such as cash
  bonuses, AIR MILES, points, and other discounts.

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Secured Credit Cards

• Can get a credit card? Then consider a Secured
  Credit Card!
• It requires a security deposit.
• The deposit equals the cards credit limit.
• Looks like all other cards It does not say
  secured.
• Deposit is not touched, its just for collateral.
• Not to be confused with a debit card.
• Great for rebuilding or starting credit.

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Credit Card Terminology

• APR (Annual Percentage Rate)
• Grace period
• Balance transfer
• Credit limit
• Billing cycle
• Cash advances

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Credit Card Terminology

• Adjusted balance
• Assessment of finance charges after payments made
  during the billing period have been subtracted.
• Previous balance
• Method of computing finance charges that gives no
  credit for payments made during the billing
  period.
• Average daily balance
• Uses a weighted average of the account balance
  throughout the current billing period. If you
  carried over a balance new purchases may be
  included in your average daily balance
  calculation.

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Credit Card Statement
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How Do I Qualify For a Card?

• Credit card issuer does a preliminary check to
  look at an applicants

• Credit history
• Income
• Current debt load
• Amount of time at current job
• Tenure at current resident
• Does he/she own or rent?

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Guarding You Credit

• Watch the number of credit cards in your wallet
• Having 2 or 3 is a good idea to build credit
• Having too many credit cards is not.
• Remember that gas cards or retail store cards are
  also considered credit cards, just like a Visa or
  MC.
• Having a credit card and not using it doesnt
  help building a good credit score.
• If you are thinking about canceling some credit
  cards, keep the ones with the most seniority.

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Guarding You Credit

• Watch your payment habits
• Never be late on a payment!
• If late, dont be too late 90 days late is worse
  that 60 days 60 days is worse than 30 days.
• Always try to make larger payments than the
  minimum, but never miss making at least the
  minimum payment.
• If possible, try paying the full balance of your
  credit card each month It saves you money and
  frees your credit balances.
• Dont move balances from card to card, pay them.

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Guarding You Credit

• Watch your credit limit
• How much is ideal? It depends on your annual
  income and credit history.
• The limit on any open line of credit is
  considered by loan executives as good as money in
  you pocket, whether you use it or not.
• Try to never exceed more than 50 of your limit.
• Keep the line of credit as free as possible for
  emergencies.

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Guarding You Credit

• Watch out for any clerical mistakes your creditor
  may make when processing your payments
• Watch out for identity theft
• Look at history of charges
• Investigate any unfamiliar charges
• Revise periodically your credit report

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What Rights Do I Have?

• Issuer must credit your account the day it is
  received.
• You may dispute a mistake on you bill and
  withhold payment while charge is investigated.
• Dispute must be resolved within two billing
  cycles, but no more than 90 days.
• Debt collectors may not call you before 8am and
  after 8pm, and must be respectful at all times.

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Conclusion

• A credit cards make great sense if the interest
  is competitive, it has a grace period, and no
  annual fee.

Credit cards dont accumulate debt, people
accumulate debt. -Credit-Wise Cat Proverb
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The World of Credit Cards
Questions?