Choosing and Using Credit Cards

1
Choosing and Using Credit Cards
2
Beware of the Free Shirt!

• Many credit card companies offer students free
  items just for filling out an application.
  
• Every time you fill out an application it counts
  10 points against your credit rating.
  
• If you are approved you will soon have cash at
  your finger tips in excess of 5,000, which might
  sound good, until you get that first bill!

3
But I have to have one to build my credit rating

• While credit cards can build your credit
  rating, you can also do that by putting your
  name, instead of your parents on utility bills or
  cell phone bills.

4
Credit Card Terms

• A credit card is a form of borrowing that
  often involves charges. Credit terms and
  conditions affect your overall cost. So it's wise
  to compare terms and fees before you agree to
  open a credit or charge card account. The
  following are some important terms to consider
  that generally must be disclosed in credit card
  applications or in solicitations that require no
  application.

5
Annual Percentage Rate (APR)

• The APR is a measure of the cost of credit,
  expressed as a yearly rate. It also must be
  disclosed before you become obligated on the
  account and on your account statements.
• The card issuer also must disclose
• the "periodic rate" - the rate applied
• to your outstanding balance to figure the
  finance charge for each billing period.
  

6
When considering the APR

• Many cards offer introductory APRs that are
  very low.
  
• Read the fine print, they often
• jump to as high as 20 after an
• initial period of a few months.
• Other have hidden APR jumps for late or
  missed payments. Even your first late payment can
  cause your rate to jump to 20.
  

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How it can add up quickly

• For example
• 20.9 APR
•   3000.00 current balance
• 75.00 minimum monthly payment
• 10.00 extra amount paid over monthly
  minimum
  
• Results in a regular payoff time of 23 years, 5
  months and 11 years, 6 months when making the per
  month extra payment.
  

8
Annual Fee

• Check the annual fee. Most incentive cards (for
  example, airline mileage) charge you an annual
  fee for having the card.
  
• Look for a no annual fee card, if you cannot
  find one, then shop around for the lowest annual
  fee. It should not exceed 100.

9
Free Period

• Also called a "grace period," a free period
  lets you avoid finance charges by paying your
  balance in full before the due date. Knowing
  whether a card gives you a free period is
  especially important if you plan to pay your
  account in full each month. Without a free
  period, the card issuer may impose a finance
  charge from the date you use your card or from
  the date each transaction is posted to your
  account.

10
Transaction Fees and Other Charges

• A card may include other costs. Some issuers
  charge a fee if you use the card to get a cash
  advance, make a late payment, or exceed your
  credit limit. Some charge a monthly fee whether
  or not you use the card.

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If you decide to get a one

• Do your research about what to look for
• Shop around for the best card
• Talk to your parents about it
• Only get one!
• Use it for emergencies
• only and pay it off every month
• If you get into debt ask for help
• immediately!!!!!