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Consumer Action: Use Credit Wisely

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What can credit do for you?
Help you through a financial emergency
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Enable you to pay for a purchase over time
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Provide a short, interest-free loan
Enable you to rent a car, hotel room, etc.
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Offer convenience, security when shopping
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Rebates or rewards
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Allow you to avoid carrying cash
Allow you establish credit/build good credit
Consumer Action: Use Credit Wisely

Installment Credit
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Fixed number of monthly payments
Car loans, mortgages
Revolving Credit
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Short-term, open-ended
Assigned credit limit
Available credit fluctuates as you make purchases & payments
Option to make full or partial payment
HELOCs, credit cards
Consumer Action: Use Credit Wisely

Credit, charge & debit cards
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Visa, MasterCard, Discover
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Affinity cards
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Rewards cards
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Secured cards
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Retail and gas cards
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Stored value (prepaid) cards
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Charge cards
Debit cards
Consumer Action: Use Credit Wisely

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Credit limit
Method of computing the balance
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Minimum payment
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Payment due date
Grace period
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Interest rate
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Fees
Consumer Action: Use Credit Wisely

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The lender’s fee for allowing you to use its money
Expressed as a percentage of the credit
Fixed vs variable interest rate
Annual percentage rate
(APR)
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Periodic interest rate
Different rates for a single card:
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Teaser
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Cash advance
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Purchase
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Penalty/Default
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Balance transfer
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Effective interest
Consumer Action: Use Credit Wisely

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Application fee
Annual fee
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Balance transfer fee
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Cash advance fee
Currency conversion fee
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Late fee
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Overlimit fee
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Bounced check/returned item fee
Miscellaneous fees
Consumer Action: Use Credit Wisely

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Break into three groups
Choose one person on your team to “buzz” in when you think you have the correct “question” to the answer
A correct answer earns the point. An incorrect answer loses a point and allows another team to “steal” the point.
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Remember to phrase your answer in the form of a question.
Consumer Action: Use Credit Wisely

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Opening/closing date
Past due amount
New balance
Minimum payment due
Due date
Account summary
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Transactions
Rewards information
Explanation of finance charges
Effective APR
Consumer Action: Use Credit Wisely

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In 2007, credit card customers who revolved their debt (didn’t pay the balance in full each month) paid $18.1 billion in penalty fees to credit card companies.
Source: “Don’t Get Clobbered By Credit Cards,” by Gary Weiss
Consumer Action: Use Credit Wisely

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Credit limit
Purchase APR
Balance transfer APR
Cash advance APR
Promotional APRs
Penalty APR
Variable-rate info
Grace period
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Annual fee
Transaction fees
Penalty fees
Balance computation method
Minimum finance charge
Rewards
Consumer Action: Use Credit Wisely

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Break into groups
Answer the questions for each scenario based on what you have learned so far
There may be more than one “right” answer to each question
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Choose a spokesperson to explain your choices
Consumer Action: Use Credit Wisely

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Pre-approved offers
Invitations to apply
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Instant credit
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Consumer-initiated application
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Banks, credit unions, retailers, card companies, and other institutions
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Compare offerings, terms
 www.consumer-action.org
 www.bankrate.com
 www.cardtrak.com
 www.cardratings.com
Consumer Action: Use Credit Wisely

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Know your credit limit and don’t exceed it
Charge only as much as you can repay
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Pay more than the minimum, if possible
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Pay by your due date (and time!)
Use a debit card, not a credit card, to get cash
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Don’t accumulate too much debt
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Avoid penalty fees and rates
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Consider optional fee-based services carefully
Contact a credit counselor (www.nfcc.org or www.aiccca.org)
Consumer Action: Use Credit Wisely

You’ve completed the ‘Use Credit Wisely’ training!
Consumer Action: Use Credit Wisely