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Credit

Credit. CREDIT. Bell Ringer In a new section of your notes, define the term ‘Credit’ using the glossary in the textbook. Credit vs. Debit Quiz. You must have enough money at the time you pay for something The balance can increase on this card if you don’t pay the entire amount

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Credit

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  1. Credit CREDIT Bell Ringer In a new section of your notes, define the term ‘Credit’ using the glossary in the textbook.

  2. Credit vs. Debit Quiz • You must have enough money at the time you pay for something • The balance can increase on this card if you don’t pay the entire amount • This card will help you stay out of debt • If you lose this card you are only responsible for up to $50 of fraudulent charges made on this card

  3. What Am I Responsible For? • Credit - By law, once you report the loss or theft, you have no further responsibility for unauthorized charges and your maximum liability under federal law is $50 per card. • Debit Card - If the charges occurred before you reported the card missing your liability is determined on how quickly you reported the loss. Within two business days you will not be responsible for more than $50 for unauthorized use. After two business days you could lose up to $500 because of an unauthorized transfer. After 60 days may be liable for all of the amount.

  4. Credit is not . . . more money but tomorrow’s money an increase in income but an increase in debt

  5. The Three C’s of Credit • Character – will you repay the debt • Honesty and reliability • Capacity – can you repay the debt • Working regularly in an occupation • Capital – what if you don’t repay the debt • What valuable assets could be used if income is unavailable?

  6. When Should I Apply For Credit?

  7. Where Can I Get Credit? Page 280-281

  8. Where Can I Get Credit?

  9. Installment Revolving • Use for expensive items • Usually requires a down payment • Secured; (collateral close ended • Pay a set amount each month • Payment includes principal and interest • Established limit • Continual payment until paid off • Unsecured; open ended • Minimum payment must be made each month • Interest added to remaining balance Two Types of Credit

  10. Installment OR Revolving • Car Loan through Bank (installment) • Credit Card (revolving) • Sofa using store financing 6 months and no interest (revolving) • Mortgage on a House through the bank (installment) • Payday loan (revolving)

  11. Ways to Build Good Credit • Get a job and keep it • Manage your checking account responsibly • Apply for a small credit account at a local retail store at which you shop. Use it to make small purchases. Repay in full each month. • Use your savings account as collateral.

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