1 / 30

Financial Planning: Credit Cards

Learn about the impact of credit card debt, average American incomes, credit card statistics, and tips to manage debt effectively. Understand the importance of credit scores, fees to avoid, and strategies to reduce and pay off credit card debt efficiently.

ksellers
Download Presentation

Financial Planning: Credit Cards

An Image/Link below is provided (as is) to download presentation Download Policy: Content on the Website is provided to you AS IS for your information and personal use and may not be sold / licensed / shared on other websites without getting consent from its author. Content is provided to you AS IS for your information and personal use only. Download presentation by click this link. While downloading, if for some reason you are not able to download a presentation, the publisher may have deleted the file from their server. During download, if you can't get a presentation, the file might be deleted by the publisher.

E N D

Presentation Transcript

  1. Financial Planning: Credit Cards

  2. PART 1: DEBT

  3. Debt balances are current as ofJune 2018 American Debt

  4. Average American Income https://www.statista.com/statistics/233301/median-household-income-in-the-united-states-by-education/ http://www.buzzle.com/articles/average-american-income.html

  5. The average age at which a U.S. consumer gets their first credit card is 21 • 84% of college students have credit cards • The average undergraduate student has $2,200 in credit card debt • The average college graduate has $4,100 in credit card debt • The average college graduate has nearly $20,000 in debt College Students & Credit

  6. Pretend you owe $9,000 to your credit card company • If the interest on your credit card is 18% • The minimum payment is $135 per month. • How long would it take to pay off the $9,000 debt and finance charges? How Long Would It Take?

  7. Trick question! You will NEVER pay off the $9,000 debt paying the minimum payment of $135 per month. • Do the math: $9,000 x .18 = $1,620 finance charge. • $1,620 divided by 12 = $135 per month How Long Would It Take?

  8. The average interest rate is about 14.98% A.P.R. (Annual Percentage Rate) • As of 2008, the average number of credit cards Americans have is 3.5 • The average credit card debt per borrower in the U.S. is $4,996 in 2012 Statistics

  9. Let’s say you owe $3,000 on a credit card with a 15% interest rate • If you make the minimum payment of $75, it would take Over 4 ½ years to pay off your credit card! The Cost of Time

  10. Credit Card Debt Illustration http://www.youtube.com/watch?v=Vz05A6cP6Iw Running Time 3:24

  11. Part 2: FICO Score

  12. 84% of undergraduates indicated they needed more education on financial management topics. In fact, 64%would have liked to receive information in high school (Source: Sallie Mae, "How Undergraduate Students Use Credit Cards," April 2009) Financial Management Training

  13. The FICO score is one such popular scoring method. Its scale runs from 300 to 850. • The vast majority of people will have scores between 600 and 800. • A score of 720 or higher will get you the most favorable interest rates on a mortgage Credit Scores

  14. Breakdown of Credit Scores

  15. What Makes Up Your Credit Score?

  16. Part 3: How to avoid the Credit Card=DEVIL

  17. Fees are how credit card companies make money off of you. Some of the most common fees include: • Application fee • Annual fee • Cash advance fee • Going over your credit limit • Late fee • Finance charge (interest) • Returned check fee What are Fees?

  18. Sample Credit Card Offer

  19. Look for errors. Write your credit card company immediately. • Has your rate been increased? • Check your balance. Know what you owe Read Your Statement Carefully

  20. Pay on time. Late payments negatively affect your credit score. There may be fees for late payments. • Avoid cards with annual fees. Credit Card Tips

  21. Usually occur before or after holidays • Interest is still being added to your balance Say No to Skip Payments

  22. Increasing your credit line is like having a whole cake in front of you to eat instead of a small piece. Reject Offers to Increase Your Credit Line Small Credit Line Large Credit Line

  23. Ask yourself, “Do I really need this?” • Make more than the minimum payment • Avoid reaching the credit card limit. Keep a portion of your credit limit for emergencies • Late fees may also put you over your credit limit and raise your rates Credit Card Tips

  24. Paying off your balance is difficult if you keep adding to it. • Use your debit card or cash instead Stop Using Credit

  25. If you have a long history with the credit card company and have made payments on time, call and ask for a rate reduction Reduce the Interest Rate

  26. Transfer your balance to a credit card with a lower interest rate*. • *be careful about introductory rates Transfer Your Balance

  27. Never borrow more than 20% of your annual net income (after taxes) • For example, if your annual net income is $9,600, you should not have a debt load more than $1,920 • Your monthly debt payments should never be more than 10% of your monthly net income. Credit Cards Rules of Thumb

  28. Don’t let anyone use your card • Instead of signing the back of the card, write “Check I.D.” • Check your credit scores at least once a year to check for errors. It is free (once a year) Credit Cards Safety Tips

  29. Establishes credit history • - Helpful in the future when you go • to buy a house or a car • Some credit cards give you cash back • You can borrow money for free if it is paid back in full in 30 days! Credit Cards Can Be Good

  30. www.annualcreditreport.com • www.experian.com • www.transunion.com • www.equifax.com Request Copies of Your Credit Report

More Related