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Credit Cards

Credit Cards. Independent Living. Why learn about credit/credit cards?!. 9 out of 10 American families use credit Mortgage, Medical, credit cards, etc. An average American family has… 2.5 credit cards $2,400 in charges Pays $441+ per year in interest charges

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Credit Cards

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  1. Credit Cards Independent Living

  2. Why learn about credit/credit cards?! • 9 out of 10 American families use credit • Mortgage, Medical, credit cards, etc. • An average American family has… • 2.5 credit cards • $2,400 in charges • Pays $441+ per year in interest charges • 1/6 families feel out of control with their credit cards and keeps on charging • 1/10 families only make minimum payments and keeps on charging • 1/20 families CAN’T even make minimum payments on all of their cards and yet they keep charging!

  3. The granting of credit: The 3 C’s • In order to be approved for credit/borrow money the creditor will look at the following things: • Capacity: is you’re ability to repay what you charge • Collateral: is what they will take back if you don’t pay (doesn't’t apply for credit cards) • Character: is based on your credit bureau score, past experience with credit cards

  4. Your credit bureau score: • What is it? • A score given to each person based on their credit character • Can be anywhere from 0-850 • How is it calculated? • Payment history • Amounts owed • Length of history • New credit • Types of credit

  5. Your credit bureau score: • Why is it important? • Your score follows you everywhere and affects everything: • Ability to get a loan • Ability to get a credit card • Ability to rent/buy a home • Ability to buy a car

  6. Key terms: • APR- annual percentage rate • variable/can change (important to know if you don’t pay off your credit cards)

  7. Key terms: • Fees: late fee, over limit fee, etc.

  8. What things can hurt score the most? • Maxed out credit cards • Bankruptcy • Missing a payment

  9. What should you look for when shopping for a credit card? • Low APR • Does it offer rewards? • Do they charge fees?

  10. Additional notes: • You can officially get a credit card on your own at age 18 • But if you’re under 21 you need to prove income or have a co-signer • When to get a credit card? • If you’re 18, apply with a co-signer now, start building credit • Apply for a store card (Kohl’s, Target, etc.)

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