Staying on Good Terms Managing Creditand Debt.ppt

Types of Credit The Downside of Credit Use The price of credit is high Additional fees add to the cost Credit makes it easy to overspend You are vulnerable to fraud Credit and Debt:All Cards Are NOT Created Equal Credit Credit Cards Charge Card Debt Stored Value Card ATM/Check Card Smart Cards* Credit Myths You must give your permission for a credit report to be issued The credit reporting agency denied me credit When paid, the bad debt will go away I’m not responsible for debts on joint accounts or co-signed accounts if they are not my purchases When Parents Give Students Credit Cards “Nationally, college graduates leave school with an average of $18,900 in debt from student loans...” “…(a consumer credit counselor) has worked with students with as much as $14,000 in credit-card debt.” Ten Credit Mistakes: Overspending Carrying a permanent balance Making only minimum payments Holding too many credit cards Assuming low interest rates stay the same Ten Credit Mistakes: Paying higher interest 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 Signs of Credit Trouble Charge credit cards to the limit Use one card to pay for another Do not know your total debt Borrow from family members to pay debt Using cash advances Staying Out of Credit Card Trouble Shop for the credit card with the best terms Limit the number of credit cards you have Don’t charge perishable items Payoff as much as possible every month Pay As Much As You Can! Timing Makes a Difference Try to pay all credit card bills on time Pay off the credit card with the highest interest rate first Don’t Buy on impulse - Delay gratification Notify your creditors if you can’t make your payments on time 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 p