Choosing A Credit Card

1. Choosing A Credit Card Rachel Buckley Claire Doty Mariah MacGregor Megan McKenna

2. Different Types of Credit Cards • Standard Cards • Premium Cards • Charge Cards • Limited Purpose Cards • Secured Credit Cards • Prepaid Cards • Business Credit Cards

3. Standard and Premium Cards Standard- Usually the most basic card that a credit card issuer can offer to it’s customers. These can be used for everyday purchases to help control expenses. Premium- Credit card that offers high credit limits and often has additional features. (Product warranty, travel insurance, etc.) These can be used for both personal or business purchases.

4. Charge and Limited Purpose Cards Charge- A credit card for use with an account that must be paid when the statement is issued. Any purchases can be made with these cards as long as the person makes the payment in full when the bill comes. Limited Purpose- Card that can only be used for travel expenditures. People that travel often use these cards as well as business’ who have people constantly traveling.

5. Secured Credit Cards Secured- Card that is backed up by a savings account used as collateral on the credit available with the card. Used by people with little to no credit or a past history of bad credit and they can purchase products that can only be paid for with credit cards.

6. Prepaid and Business Cards Prepaid- Card issued by a financial institution that is preloaded with funds and is used like a normal credit card. You can purchase items online or in person but the person never spends more money than what they have. Business- Card printed with one’s name, professional occupation, company position, business address, and other contact information. Usually used for business purchases only.

7. How to find the right card for you! • What are your spending habits • Interest rate • Credit limit • fees and penalties • Balance computation method • Incentives

8. How to use your credit card? • Monitor your activity • self discipline • don’t spend what you dont have

9. How to find credit cards and from who? where to look for good cards • Credit-union cards • Association cards

10. Common Credit Card Features Credit Limit- Maximum credit a financial institution extends to client. • Also maximum amount borrowed on single card • Limits determined on application information Balance- Amount of charges owed to company. • Up to 24 hours to update • Can be zero, positive, or negative

11. Common Credit Card Features APR- (Annual Percentage Rate) Numeric representation of interest rate. • Help compare expense of each transaction • Purchase APR • Cash Advance APR • Penalty APR • Introductory APR

12. How Finance Charges Are Calculated Simplest Way- (Balance x Monthly Rate) • 18% APR, $500 Balance, 12 Month Billing Cycle • Periodic Rate: (.18/12) = .015 • Finance Charge: (500 x .015) = $7.50

13. Grace Period • Period of time company gives you to pay new charges, without having to pay interest on new balance. • runs from end of billing cycle to the next payment due date.

14. Fees Read credit card agreement carefully in order to look over possible fees such as: • Application fee • Annual fee • Membership fee • Balance-transfer fee • Set-up fee • ect.

15. Liability Limits If credit card is lost/stolen, you are only responsible for a certain limit of money before you are covered. • many companies choose $50.00

16. Incentives/Rewards Reward cards are able to give back rewards or incentives such as: • Cash • Travel miles • A certain percent cash back on a specific amount of money spent over a period of time

17. Tips For Choosing a Credit Card Buying your first credit card? Here are some things to think about and keep in mind: • Department store or gasoline company. • Shop around • Paying monthly? - Look for grace period, no annual fee, or low annual fee. • Pay a transaction fee for every use of your card. • Carrying a balance? - Low monthly finance charge. • Read your card users instructions - Make bill payments.

18. More Tips... • Want credit? - Beware of offers that may be given to you. • Does the card offer a grace period? - Take advantage of it and pay in full. • Have a bad credit history? - Look for a secured credit card. • Dont mind higher annual fees? - Look for Travel and Entertainment credit cards. • Debit (not credit) - Amount of sale taken from checking. • Smart Card - This card is a smartie.

19. Want a Lower Interest Rate? A lower interest rate can lower payments, other payments can be payed back quicker. • What is your lender charging? • What do other lenders offer? • What is your credit score? • Call your credit card company.

20. Sources http://www.immihelp.com/newcomer/credit-card-safety-tips.html http://www.creditorweb.com/definition/standard-card.html http://www.investopedia.com/terms/c/credit_limit.asp http://www.federalreserve.gov/creditcard/glossary.html http://www.investopedia.com/terms/c/credit-card-balance.asp https://www.bankofamerica.com/credit-cards/education/what-is-apr.go http://www.investopedia.com/terms/s/securedcard.asp http://www.investopedia.com/terms/p/prepaid-credit-card.asp https://www.wellsfargo.com/financial-education/credit-management/lower-interest-rates/ http://www.creditcards.com/credit-card-news/help/6-consider-before-choosing-picking-credit-card-6000.php http://credit.about.com/od/buildingcredit/qt/howtousecredit.htm http://frugalliving.about.com/od/debtreductio1/ht/How-To-Lower-Your-Credit-Card-Interest-Rates.htm