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2/26/14 “Credit card repayment” - #7 on HW

2/26/14 “Credit card repayment” - #7 on HW What is the total amount Leslie will pay for her $13,000 hospital visit if she makes only the required minimum payments? How long will it take her to pay it off? How could Leslie avoid paying any interest on her hospital visit?

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2/26/14 “Credit card repayment” - #7 on HW

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  1. 2/26/14 “Credit card repayment” - #7 on HW What is the total amount Leslie will pay for her $13,000 hospital visit if she makes only the required minimum payments? How long will it take her to pay it off? How could Leslie avoid paying any interest on her hospital visit? Check TOTAL AMOUNT answers from yesterday: (1) 890 + 264 = $1,154 (2) 2600 + 847 = $3,447 (3) 112 + 12 = $124 (4) 1500 + 322 = $1,822 (5) 156 + 14 = $170 (6) 250 + 20 = $270 (8) 456 + 59 = $515

  2. Leslie’s $13,000 hospital visit: Minimum Payment: Interest: Payoff time: Total cost =

  3. Leslie’s $13,000 hospital visit: Minimum Payment: $55 per month Interest: Payoff time: Total cost =

  4. Leslie’s $13,000 hospital visit: Minimum Payment: $55 per month Interest: $8,724 Payoff time: Total cost =

  5. Leslie’s $13,000 hospital visit: Minimum Payment: $55 per month Interest: $8,724 Payoff time: 156 payments = 13 years Total cost =

  6. Leslie’s $13,000 hospital visit: Minimum Payment: $55 per month Interest: $8,724 Payoff time: 156 payments = 13 years Total cost = $21,724

  7. Leslie’s $13,000 hospital visit: Minimum Payment: $55 per month Interest: $8,724 Payoff time: 156 payments = 13 years Total cost = $21,724…How could she avoid this?

  8. 2/26/14 Econ. Agenda What is a credit score? (class notes) Understanding your credit score worksheet HW: Finish “Understanding Your Credit Score” wksht.

  9. 2/26/14 Class notes – credit scores delinquency: missing a payment due on your loan  installment loan: you borrow one sum of money and pay a set amount/percentage back per month (mortgages, car loans, college loans, etc.) revolving credit: credit is automatically renewed as debts are paid off (credit cards, etc.)

  10. 2/26/14 Class notes – credit scores • What is a credit score? • Number that “measures” your financial stability & ability to pay back loans • Determines interest rates you get from banks, lenders, credit cards, etc. • Also credit limits on credit cards • Scores range from 300 – 850 • Average American score is 650 – 740

  11. 2/26/14 Class Notes – credit scores • Good Score = you’re trustworthy • Lower interest rates, APR, fees, etc. • Approved for loans (house, car, etc.) • Higher credit limits on credit cards • Bad Score = you’re irresponsible • Higher interest rates, APR, fees, etc. • Lower credit limits • Denied loans (house, car, etc.)

  12. 2/26/14 Who determines your credit score? • FICO: Fair, Isaac, & Company • FICO credit score: • Collection of 3 credit reports from the 3 major credit reporting companies • TransUnion • Experian • Equifax • 90% of all companies that look at credit scores use your FICO score FICOscore

  13. What determines your credit score? • Find out at: • www.myfico.com • Answer questions about the 5 factors that determine your score.

  14. How can my credit score affect my life? http://www.youtube.com/watch?v=WtYpZTLhAnM

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