Families and Credit Cards

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FamiliesandCredit Cards

• A project of Consumer Action and American Express

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Youth and credit cards

• Early discussions about how to use credit can
  help kids steer clear of trouble when they become
  adults
• You can teach your kids how to get the most out
  of credit

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What would kids need a credit card for?

• Emergencies
• Field trips and other travel
• Shopping

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Credit Yesteryear Activity

• What was credit used for in your house growing up?

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Credit card eligibility

• Individual credit cards are issued to people 18
  years and older
• Your child can be an authorized user on your
  credit card account
• You (the primary cardholder) are responsible for
  all payments

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Authorized users

• Credit card policies for authorized users
  (secondary accounts) vary widely
• Minimum age
• Account numbers
• Billing statements
• Credit reporting
• 888 - 5OPTOUT
• Responsibility
• Debt collection

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Take a Loan? exercise

• Please refer to the Take a Loan? Needs and
  Wants Activity Sheet
• If you carry a credit card balance, you are
  taking out a loan to pay for your purchases

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Discussing credit cards with your children

• What would your child use credit for?
• Set a spending limit
• Responsibility for paying part of the bill

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Credit and spending management tools

• Online access
• Statements
• Alerts
• Financial calculators

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Minimum payment example

• Balance 1,000
• Interest Rate 15
• Minimum Payment 3 (30)

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Do you know?

• How long would it take to pay off a 1,000
  balance if only the minimum payment was made?

• Nine years

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Do you know?

• How much would you pay in interest if only the
  minimum payment was made?

• 576 interest
• 1,000 balance
• Total payback 1,576

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Pay more than the minimum

• What would happen if you paid an extra 10 more
  per month (40 instead of 30)

• Pay-off time would shrink to 3 years (instead of
  9)
• 206 in interest (instead of 576)
• Youd save 370

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Credit card statement

• Please refer to the sample Credit Card Statement
  Activity Sheet

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Recipe for good credit

• Damaged credit record can affect whether you get
  loans, housing, even a job

• Pay the bill on time
• Pay more than the minimum
• Check for mistakes and dispute errors
• Get free credit report www.annualcreditreport.com
  

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Credit card alternatives

• Charge cards
• Debit cards
• Prepaid cards
• Secured cards

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Strategies for parents

• Brainstorm how best to help parents reach kids
  with smart credit card strategies

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Questions and answers

• Do you have any questions about the training?

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Thanks for participating!