The ABCs of Credit Card Finance Essential Facts for Students

2. The ABCs ofCredit Card FinanceEssential Facts for Students 2012 Carol A. Carolan, Ph.D.

3. Essential Facts … Two Groups of Information • Credit Card Costs • Credit Card Behaviors 2

4. Credit Card Costs 3

5. Annual Fees • Interest (APR) - CARD Act of 2009– APR Stable 1 Year - Exceptions: Variable Rate APR, Promotional Rates, 60 Days Late, Completion of Workout Plan • 45 Days Notice • Interest Calculation • Cash Advances & Convenience Checks • Payment Allocation 4

6. Default/Penalty Rates • Low Interest Introductory Rates • Balance Transfers • Late Fees • Over-Credit-Limit Fees • Bounced Check Fees • Currency Conversion Fees • Payment Fees • Transaction Fees 5

7. Choosing aCredit Card 6

8. Look For: • A Low Annual Percentage Rate (APR) • No Annual Fee • A Long Grace Period • Low Fees 7

9. Types of Credit Card Users • Convenience Users • “Revolvers” - CARD Act 2009 - Disclosures 8

10. The Schumer Box 9

11. Introduced by Senator Schumer • A Grid Containing Rates & Fees • Easy to Compare Credit Card Offers • CARD Act Requires Issuers to Post Cardholder Agreements on Internet 10

12. Dos and Don’ts 11

13. One Card • Student Loans for Tuition • Wants vs. Needs • Convenience • Pay More Than the MMP • Be a Manager 12

14. Don’t Skip Payments • Pay on Time • Don’t Exceed Your Credit Limit • Cash Advances • Convenience Checks • Be Wary of Teaser Rates 13

15. Credit Card Shuffle • Low Credit Limit • Quickly Mail Payments • Save Receipts • Change of Address • Lost and Stolen Cards • Protect Your Credit History 14

16. There’s Alwaysa Solution 15

17. Getting Out of Debt • Don’tDeny Problem • Stop Using Your Card • Contact Your Credit Card Issuer • Get a Job • Reduce Expenses • Talk about Your Problems • Debt Consolidation 16

18. Credit Reports& Credit Scores 17

19. Credit Report • Collection of Information • Financial Report Card • Lenders Use this Information • 3 Main Credit Reporting Agencies • Regularly Review Your Credit Reports 18

20. Credit Score • Numeric Value Applied to a Credit Report • Fico Score Most Well Known • Higher is Better 19

21. What Goes Into OurCredit Scores? • 35% Payment History • 30% Total Amount Owed “Debt-to-Credit Limit Ratio” • 15% Length of Credit History • 10% New Credit • 10% Types of Credit 20

22. Consequences of IrresponsibleCredit Card Use 21

23. Denial of Credit • High Interest Rates • Difficulty Renting an Apartment • Denied Employment • Graduate School Rejection • Higher Car Insurance Premiums • Big Bucks for Cell Phones • Higher Deposits – Gas, Phone, Electric 22

24. Identity Theft 23

25. Signs of Identity Theft • Card/Statement Not Requested • Statement Not Received • Unauthorized Charges • Denied Credit • Debt Collectors 24

26. Minimize the Risk… • Keep Personal Information Personal • Don’t Use Social Security Number • Leave Social Security Card Home • Carry Only What’s Needed • Photo ID Credit Card • Know Your Billing Cycles 25

27. Shred Receipts • Use the Post Office • Creative Passwords • Purchase on Secure Websites • Keep Personal Information Safe • Review Credit Reports • Computer Virus Protection 26

28. Victims of Identity Theft Should… • Contact the Big Three • Fraud Alert • Order Free Credit Reports & Review • Call Fraud Departments • Close Fraudulent Accounts • File a Police Report • Contact the FTC 27