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Credit Cards

Credit Cards. Presentation By: Nick Ritz & Steven Michel. Using Credit Cards wisely. This means making payments on time and avoiding having too many credit card accounts. Condense your credit cards in to one or, or at most, two credit card accounts to help focus financial decision.

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Credit Cards

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  1. Credit Cards Presentation By: Nick Ritz & Steven Michel

  2. Using Credit Cards wisely • This means making payments on time and avoiding having too many credit card accounts. Condense your credit cards in to one or, or at most, two credit card accounts to help focus financial decision

  3. Credit Card Comparisons • There is a great resource for information about credit cards that you’d never expect. Every six months the Federal Reserve System publishes a survey about all credit card companies on their website. For each company, the survey results list the credit card plans offered, where they’re available, the APR, and whether the credit card APR is fixed or variable.

  4. Tips on how to fix bad credit • There are credit repair type services available. They will work with both the federal bureaus and your various creditors to improve your credit score.

  5. How to improve your credit score • Keep away from high balances they can possible cost you upwards of 100 points. • Monitor utilization • Work to increase credit lines.

  6. Inquiries Soft and Hard • Soft inquiries do not affect your credit rating at all. Ex: viewing your credit report. • Hard inquiries hurt your credit score. You may be denied credit if you have more than two within the past six months.

  7. How will you use your credit card • If you expect to always pay your monthly bill in full and other features do not interest you your best choice is to choice a card that has no annual fee and offers a longer grace period. • If you sometimes carry a balance over from month to month you may want to choice a credit card with a lower APR. • If you expect to use your card to get cash advance, you’ll want to look for a card with lower APR and lower fees on cash advance.

  8. What are APRs • The annual percentage rate is the way of starting the interest rate you will pay if you carry over a balance, take out cash advance, or transfer a balance from another card. It is stated as a yearly rate.

  9. Multiple APRs • The APRs for cash advances and balance transfers often are higher than the APR for purchases. • Tiered APRs- Different rates are applied to different levels of outstanding balance. • Penalty APR- APR may increase if you are late in making payments. • Introductory APR- A different rate will apply after the introductory rate expires. • Delayed APR- A different rate will apply in the future.

  10. Fixed vs. Variable APR • Some cards are fixed rate. Meaning the APR doesn’t change. If the rate is to change the company must tell you in advance. • Variable rate- APR changes from time to time. The rate is usually tied to another rate such as the prime rate or the treasury bill rate.

  11. How is the finance charge calculated? • The finance charge is the dollar amount you pay to use your credit. The amount depends on your outstanding balance and the APR. • They can calculate it over one billing cycle or two, using the adjusted balance, the average daily balance, or the previous balance and including or excluding new purchases in the balance.

  12. Continued • Depending on the balance you carry and the timing of your purchases and payments, you’ll usually have a lower finance charge with one-cycle billing and either the average daily balance method excluding new purchases, the adjusted balance method, or the pervious balance method.

  13. What kind of card is it? • Secured card- require a security deposit. The larger the security deposit, the higher the credit limit. Secured cards are usually offered to people who have limited credit cards. • Regular cards- they do not require a security deposit and have just a few features. Most of these have higher limits than secured cards. • Premium cards- offer higher credit limits and usually have extra features.

  14. What are your liability limits? • If your cards are lost or stolen and then is used by someone else without permission you do not have to pay more than $50 of those charges. This protection is provided by the federal Truth in Lending Act

  15. How to Pay Less Interest • As a rule of thumb obviously the lower APR’s will charge a smaller amount of interest. Check what APR’s your card is charging and shop around for better offers. It is not uncommon to find interest rates ranging from 0% to 20%. • It is also in your best interest to ask how long the interest rate is being offered because some companies offer a short low introductory rate and then revert back to the normal rate.

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