Credit Cards: Friend or Foe

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Credit Cards Friend or Foe?

• University of NebraskaCooperative
  ExtensionCommunity Lesson

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Credit Card Concerns

• Senior citizens are slowly drowning in debt
• 53.8 of senior households carry some debt
• Half of those households are over 20,000 in debt
• Debt is up 164 since 1992
• Seniors are not living extravagantly, but their
  expenses are rising at double-digit rates

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Seniors Turning to Credit Cards

• Seniors are turning to credit cards to cover
  rising costs
• Retirees ages 55 to 64 average 6,900 in credit
  card debt
• Americans over 65 arent in as much debt, but at
  least half carry a debt of 2,000 or more

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Stolen Identity or Lost Credit Cards

• A lost or stolen credit card, or worse having
  ones identity stolen, can cause financial woes
• Emotional stress caused by these challenges can
  be very overwhelming

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Goals and Objectives

• Credit Cards Friend or Foe? is designed to
  help participants develop techniques to
• limit credit card debt
• limit fees paid to credit card companies,
• protect personal identity.

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Discussion Questions

• Share experiences of a credit card challenge or
  identity theft.
• Why is the management of credit cards important
  to people our age?
• What concerns you about having and using a credit
  card?

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Rules for Discussing Financial Matters

• Encourage and respect everyones participation.
• Personal examples shared during the presentation
  are not to be shared with others.
• Affirm an individuals choice about owning and
  using a credit card.

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Rules for Discussing Financial Matters

• Encourage you to share the educational components
  of the presentation with others.
• Seek help if you are at financial risk. Help is
  available from professionals and family.

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Group Scenarios

• Divide participants into four groups. Have each
  group discuss a different scenario and
  questions.
• Have each review their scenario and report their
  thoughts to the entire group.

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Esthers Wants vs. Needs

• What are Esthers needs?
• What are Esthers wants?
• What does Esther think are her needs and
  wants?

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Esters Wants vs. Needs

• How could Esther have avoided the problem of not
  having enough to pay her electric bill?
• Do you think filing out a credit card application
  for 1000 of instant credit is the right thing
  for Esther to do?
• Would Esther be wise to explore other living
  arrangements? If so what should she consider?

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Selecting and Using a Credit Card

• Recommend that your payment is sent 7 to 10 days
  before the due date.
• Electronic payment should be made 2 to 3 days
  before the due date to ensure payment being
  credited to the account and no late fees charged.
• Review details of cash advance fees. Interest
  may be charged as well as a fee (check minimum
  fee) for the cash advance transaction.

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Credit Card Wrap

• Make a credit card wrap by cutting a recipe card
  to wrap around your credit card.
• Record each purchase or cash advance to the
  credit card, just as you would a check in a
  check register.
• Keep a running balance of what is charged on your
  credit card each month. Do not over spend your
  limit/budget.
• Check your record against your statement.

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Selecting and Using a Credit Card

• Shop for a credit card. Study all the details of
  the application before signing. Note fees
  charged including annual fee.
• Understand the details of the introductory offers
  and how long they last.
• Know what constitutes a late payment and the
  amount of penalties charged.
• Credit card bills are not considered paid until
  the company receives and credits payment to your
  account.

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Jones Credit Card Bill

• What Stan and Alice expected . . .
• Un-paid balance on prescriptions
  280.00
• Cash Advance 50.00
• Interest on balance due 0.00
• (at introductory 0 APR)
• November Balance Due 330.00

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Jones Credit Card Bill

• What Stan and Alice were billed!
• Balance carried over from September
  280.00
• October late fee 19.00
• Interest on un-paid balance 3.98
• Cash Advance 50.00
• Cash Advance fee (minimum 5.00) 5.00
• Cash Advance interest 1.40
• (15.99 based on 12 days)
• November Balance Due 359.38

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Tips for Seniors in Debt

• Studies show that older Americans have a higher
  debt load than in the past
• This is due to rise in health care costs and
  decline in pensions and drop in retirement income
• Many senior citizens find themselves victim to
  fraud, scams and identity theft

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Tips for Seniors in Debt

• Do not be afraid to seek guidance. Talk to a
  banker or financial advisor first. Family
  members can also be of help.
• Put aside any needless guilt or shame.
• If a spouse previously took care of finances, it
  does not relieve you of being responsible now.
• Make a monthly budget and determine if you can
  meet your obligations.

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Tips for Seniors in Debt

• Prioritize your bills. When income is limited
  always pay your mortgage/housing first, car
  second, and dont let your health insurance
  lapse.
• Unsecured debt, such as credit cards can be
  negotiated.
• Know who your creditors are. The more that you
  know about whom you owe, the less likely you will
  be to become a victim of scam.
• Do not let collectors pressure you into a bad
  decision.

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Tips for Seniors in Debt

• Consider a part-time job if possible to help you
  catch up on bill payments.
• Cut expenses to a minimum where possible, but do
  not jeopardize your health.
• Ideally retire without a mortgage.
• Move to a smaller housing option.
• Do not open additional credit lines or use
  convenience checks to pay off debt.

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Tips for Seniors in Debt

• Do not cash out home equity lightlyif expenses
  are already tight, this could put your home at
  risk.
• Consider tapping your life insurance.
• Last option includes bankruptcy and not paying
  your bills. When you die, if you have assets,
  your creditors will be paid from your estate. If
  you jointly own assets with someone else, that
  asset may be taken to repay any debts.

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George Loses It?

• What steps should George have taken in the first
  place to avoid having his identity stolen?
• What special precautions should be taken when
  using credit cards to protect ones identity?
• What should George have done when he first
  noticed his credit cards were missing?

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Tips for Protecting Your Identity

• Try to maintain the greatest possible level of
  security over your private information.
• Do not give out financial information on the
  phone unless you made the call and know the
  person or organization being called.
• Store in a secured place, copies of all identity
  and fronts and backs of credit cards carried with
  you.
• Report missing items immediately.
• Call the PoliceIdentity Theft
• is a Crime.

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Tips for Protecting Your Identity

• Shred or tear all mailed credit or other
  solicitations, bank records or any other
  discarded documents that may provide personal
  information.
• Know due dates for bills. If you do not receive
  them on time, contact the company.
• To limit number of pre-approved credit card
  offers call 1-888-567-8688.
• See Participant Manual for additional ways to
  limit offers that you receive.

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Tips for Protecting Your Identity

• Periodically request a copy of your credit
  report.
• Do not put your Social Security number on your
  drivers license or print on your checks.
• Do not carry your Social Security Card in your
  billfold.
• Store new and cancelled checks in a safe place.
  Report lost/stolen checks to your bank
  immediately, and carefully review every statement.

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Guard Against the Gambling Trap

• Older citizens are targeted by the gaming
  industry as they have time available and
  accumulated wealth.
• Casinos offer a safe environment, low-cost food,
  social activity, entertainment and in some cases
  transportation.

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Guard Against the Gambling Trap

• To protect yourself from the risk of becoming a
  compulsive gambler, set personal guidelines that
  will help you keep gambling activity truly a form
  of entertainment.

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Guard Against the Gambling Trap

• No one should feel pressured to gamble.
• Set limits to play both time limit and a limit
  to the amount that you are willing to lose.
• Be aware that you will lose more often than you
  will win.
• Money spent gambling should be considered a cost
  of entertainment.

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Guard Against the Gambling Trap

• Money to provide for basic needs, such as food,
  clothing, medication, and shelter should not be
  used for gambling.
• Do not rely on gambling to cover the cost of
  basic needs.
• Borrowing money from any source, including credit
  card cash advances, pawning personal belongings
  or writing bad checks is risky behavior.

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Guard Against the Gambling Trap

• Do not gamble when you are feeling lonely,
  depressed or angry, or when you are under a great
  deal of stress.
• Bright lights, crowds of people and excitement of
  the casino can have a hypnotic effect.
• Drinking alcohol or using drugs while gambling is
  risky because it can interfere with your ability
  to control gambling and stick to your limits.

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Lou Maxes Out
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Credit Cards Friend or Foe?

• 53.8 of senior households carry some debt.
• Half of those households are 20,000 in debt.
• Practice what you have learned today on managing
  your financial affairs, credit card and
  protecting your identity.
• Do not become one of the statistics!

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References

• American Seniors Rack Up Debt Like Never
  Before, Seniors USA, (http//senrs.com/american_s
  eniors_rack_up_like_never_before.html).
• Cantrell, Randy, Citing of the 2000 Census
  Figures August , 2004
• Credit Prevention - Some Steps You can Take,
  Legal Counsel for the Elderly, (http//www.uaelder
  law.org/id/C.html).
• Greatest Generation in Debt,
• (http//www.cbsnews.com/stories/2003/12/10/earlysh
  ow/living/money/main587903.shtml)
• Schroeder, Debra and Rebecca Versch, Protect
  Your Credit and Identity, NebFacts, University
  of Nebraska Cooperative Extension, NF02-538
• Tips for Seniors in Debt, Consumer Credit
  Counseling Service, (http//www.cccsatl.org/index.
  asp?_methodviewsc125cn1734).