Credit Cards

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Credit Cards

• Presentation By
• Nick Ritz Steven Michel

2
Using Credit Cards wisely

• This means making payments on time and avoiding
  having too many credit card accounts. Condense
  your credit cards in to one or, or at most, two
  credit card accounts to help focus financial
  decision

3
Credit Card Comparisons

• There is a great resource for information about
  credit cards that youd never expect. Every six
  months the Federal Reserve System publishes a
  survey about all credit card companies on their
  website. For each company, the survey results
  list the credit card plans offered, where theyre
  available, the APR, and whether the credit card
  APR is fixed or variable.

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Tips on how to fix bad credit

• There are credit repair type services available.
  They will work with both the federal bureaus and
  your various creditors to improve your credit
  score.

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How to improve your credit score

• Keep away from high balances they can possible
  cost you upwards of 100 points.
• Monitor utilization
• Work to increase credit lines.

6
Inquiries Soft and Hard

• Soft inquiries do not affect your credit rating
  at all. Ex viewing your credit report.
• Hard inquiries hurt your credit score. You may
  be denied credit if you have more than two within
  the past six months.

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How will you use your credit card

• If you expect to always pay your monthly bill in
  full and other features do not interest you your
  best choice is to choice a card that has no
  annual fee and offers a longer grace period.
• If you sometimes carry a balance over from month
  to month you may want to choice a credit card
  with a lower APR.
• If you expect to use your card to get cash
  advance, youll want to look for a card with
  lower APR and lower fees on cash advance.
•  

8
What are APRs

• The annual percentage rate is the way of starting
  the interest rate you will pay if you carry over
  a balance, take out cash advance, or transfer a
  balance from another card. It is stated as a
  yearly rate.

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Multiple APRs

• The APRs for cash advances and balance transfers
  often are higher than the APR for purchases.
• Tiered APRs- Different rates are applied to
  different levels of outstanding balance.
• Penalty APR- APR may increase if you are late in
  making payments.
• Introductory APR- A different rate will apply
  after the introductory rate expires.
• Delayed APR- A different rate will apply in the
  future.

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Fixed vs. Variable APR

• Some cards are fixed rate. Meaning the APR
  doesnt change. If the rate is to change the
  company must tell you in advance.
• Variable rate- APR changes from time to time.
  The rate is usually tied to another rate such as
  the prime rate or the treasury bill rate.

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How is the finance charge calculated?

• The finance charge is the dollar amount you pay
  to use your credit. The amount depends on your
  outstanding balance and the APR.
• They can calculate it over one billing cycle or
  two, using the adjusted balance, the average
  daily balance, or the previous balance and
  including or excluding new purchases in the
  balance.

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Continued

• Depending on the balance you carry and the timing
  of your purchases and payments, youll usually
  have a lower finance charge with one-cycle
  billing and either the average daily balance
  method excluding new purchases, the adjusted
  balance method, or the pervious balance method.
•  

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What kind of card is it?

• Secured card- require a security deposit. The
  larger the security deposit, the higher the
  credit limit. Secured cards are usually offered
  to people who have limited credit cards.
• Regular cards- they do not require a security
  deposit and have just a few features. Most of
  these have higher limits than secured cards.
• Premium cards- offer higher credit limits and
  usually have extra features.

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What are your liability limits?

• If your cards are lost or stolen and then is used
  by someone else without permission you do not
  have to pay more than 50 of those charges. This
  protection is provided by the federal Truth in
  Lending Act

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How to Pay Less Interest

• As a rule of thumb obviously the lower APRs will
  charge a smaller amount of interest. Check what
  APRs your card is charging and shop around for
  better offers. It is not uncommon to find
  interest rates ranging from 0 to 20.
• It is also in your best interest to ask how long
  the interest rate is being offered because some
  companies offer a short low introductory rate and
  then revert back to the normal rate.