Credit and Debt

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Staying on Good Terms Managing Creditand Debt
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Types of Credit
Credit Alternatives
Open-End Credit Short term electric and phone
bills Revolving credit cards, gas cards, and
retail cards

• Closed-End Credit
• Automobile Loans
• Mortgage Loans
• Student Loans

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The Upside of Credit Use

• Buy/consume now, pay later
• Establish favorable credit history
• Protect against fraud
• Cope with emergencies

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The Downside of Credit Use

• The price of credit is high KNOW the APR!
• Additional fees add to the cost
• Credit makes it easy to overspend
• You are vulnerable to fraud

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All Cards Are NOT Created Equal

• Credit
• Credit Cards
• Charge Card
• Debit
• ATM Card
• Check Card

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• Other Types of Plastic Cards
• Stored Value Card
• Smart Cards

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Credit Myths

• Once paid, bad debt will go away
• Im not responsible for debts on joint accounts
  or co-signed accounts if they arent my purchases
• Credit is what got me into this mess
• Credit card companies wouldnt send me offers if
  I couldnt afford it
• If I dont use credit, I wont be able to buy
  anything

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How Much Debt Can You Afford?

• In Georgia in 2005, college students had an
  average of 16,131 in student loan debts.
• Parents are borrowing too.
• The average outstanding balance for
  undergraduates credit card accounts is 2,169.

Sources http//www.finaid.org/loans, The Project
on Student Debt, Baum and OMalley, 2003,
College on Credit, Nellie Mae.
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Ten Credit Mistakes

• Overspending
• Holding too many credit cards
• Making only minimum payments
• Carrying a permanent balance
• Assuming low interest rates stay the same

Continue...
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Ten Credit Mistakes

• Paying a higher interest rate than necessary
• Paying extra for incentive credit cards
• Not reading the disclosure statement
• Paying off the wrong credit cards first
• Ignoring extra fees or penalties

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Beware of Higher Cost Credit

• Tax Refund Loans
• Rent-to-Own
• Car Title Loans
• Bounced Check Protection

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Signs of Credit Trouble

• Maxing out credit cards
• Using one card to pay the balance on another
• Not knowing your total debt
• Borrowing from family members to pay debt
• Getting frequent cash advances

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Staying Out of Credit Card Trouble

• Shop for the credit card with the best terms
• Limit the number of credit cards you have
• Dont charge perishable items
• Pay off as much as possible every month

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Pay As Much As You Can!Balance 3,000 Interest
Rate 18
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Timing Makes a Difference

• Try to pay all credit card bills on time
• Pay off the credit card with the highest interest
  rate first
• Dont buy on impulse
• Notify your creditors if you cant make your
  payments on time

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Talking to Your Creditor

• Ask them to lower your interest rate
• Ask them to lower your credit limit
• Ask them to change when your bill is due
• Discuss your situation with them and set up a
  payment plan

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Other Credit Card Management Suggestions

• Report lost/stolen cards immediately
• Store your credit cards in a safe place
• Track your charges
• Document your concerns in writing

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Credit and Debt Counseling Services

• Budget Counseling
• Debt Repayment Plan
• You agree to not use the cards
• The debt counselor may arrange for you to make
  smaller payments and pay less interest and fees.
• You pay the debt counselor who pays your
  creditors
• The debt counselor will not put the repayment
  plan on your credit report BUT creditors may

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For individual help with serious debt problems,
contact Consumer Credit Counseling
Service www.cccsatl.org 800-251-CCCS
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• For more information, contact
• The Peer Financial Counseling Program
• PFC_at_uga.edu
• www.uga.edu/osfa/pfc

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Special Thanks to...