个人理财ch006精选.ppt

What is Consumer Credit? Credit is an arrangement to receive cash, goods or services now, and pay for them in the future. Consumer credit is the use of credit for personal needs, except a home mortgage, by individuals and families. Three ways consumers can finance purchases. Draw on their savings. Use present earnings. Borrow against expected future income. Trade-offs with each alternative. Consumer credit: Major economic force. Use and Misuse of Credit Before you use credit for a major purchase, ask yourself some questions. Do I have the cash for the down payment? Do I want to use my savings for this purchase? Does this purchase fit my budget? Could I use the credit I’ll need in some better way? Can I postpone this purchase? What are the opportunity costs of postponing this purchase? What are the dollar and psychological costs of using credit for this purchase? Advantages of Credit Current use of goods and services. Permits purchase even when funds are low. A cushion for financial emergencies. Advance notice of sales. Easier to return merchandise. Convenient when shopping. One monthly payment. Safer than cash. Advantages of Credit Needed for hotel, car reservations and shopping online. To take advantage of float time/grace period. May get rebates, airline miles, or other bonuses. Indicates financial stability. Disadvantages of Consumer Credit Temptation to overspend. Can create long-term financial problems, slow progress toward financial goals. Potential loss of merchandisedue to late or non-payment. Ties up future income. Credit costs money - more costly than paying with cash. How to Protect Yourself From Identity Theft Provide SSN only when necessary. Remove your name from junk mail, telemarketing lists. Protect yourself by shredding old credit slips, account statements, and credit offers you receive in the mail. Stop preapproved credit card offers by calling 1-888-567-8688. Types of Credit Closed-End Credit. One-time loans for a specific purpose that you