1 staying on good terms: credit and debt. 2 types of credit short term/open installment/closed ...
TRANSCRIPT
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Staying on Good Terms: Credit and Debt
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Types of Credit
Short Term/OpenInstallment/ClosedRevolving
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Beware of Predatory Lending
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All Cards Are NOT Created Equal
Charge CardDebit/Check CardCredit CardSmart Card/Cash Card
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Cost and Benefits of Credit
COSTSA.P.R./
Interest feesAnnual feesLate payment
feesOver-the-limit
fees
BENEFITSBuy/consume
now, pay later
EmergenciesEstablish
favorable credit history
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Ask yourself these questions:
Do I really need this item?Is it worth it?What interest rate am I paying?How much is the monthly
payment?Can I afford it?What happens if I don’t make the
payments?
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Pay as much as you can!
% Balance paid each month Interest Time to Pay Off
2.0 % $ 8,390 32 years, 3 months
2.5 % $ 4,641 12 years, 7 months
3.0 % $ 3,222 8 years, 7 months
($3,800 Balance at 17% APR)
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Top 10 Credit Mistakes:
1. Overspending2. Carrying a permanent balance3. Making only minimum payments4. Holding too many credit cards5. Assuming low interest rates stay
the same
Continue...
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Top 10 Credit Mistakes:
6. Paying higher interest than necessary 7. Paying extra for “incentive” credit cards 8. Insisting on a no fee credit card (hidden
costs) 9. Paying off the wrong credit cards first10. Ignoring extra fees or penalties
(continued)
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Your Credit File Impacts:
Purchasing a home or renting an apartment
Seeking employmentAuto and life insuranceGetting a loanAcquiring a cell or home phonePurchasing a car
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What’s In Your Credit File?
Personal Identification InformationPublic Record InformationCollection Agency Account InformationCredit Account InformationCompanies That Requested Your Credit
FileMost negative information stays on
your file 7 yrs, except for bankruptcy which can stay up to 10 yrs.
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How to Obtain Your Credit Report
EQUIFAX: 800-685-1111www.equifax.comEXPERIAN: 888-397-3742www.experian.comTRANS UNION: 800-888-
4213www.transunion.com
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Credit Laws
Gives consumers the right to learn what information is in their credit file
Specifies how long information stays in a file
Clarifies how to handle disputes and verifications
Continue...
Fair Credit Reporting Act
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Credit Laws
Prohibits creditors from discriminating
Requires credit grantors to notify consumers of specific reasons why they were denied credit
Continue...
Equal Credit Opportunity Act
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If a card is lost or stolen, the consumer is liable for only the first $50 after written notification to the credit grantor
does NOT cover ATM and debit cards
Credit Laws
Continue...
Truth-In-Lending
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Sets up guidelines for the handling of disputed charges on a consumer’s bill
Credit Laws
Continue...
Fair Credit Billing Act
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Prohibits harassment and limits the circumstances under which collectors can attempt to collect payment
Can’t call at your workplace if you ask them not toCan’t call your home after 9 PM Collector must provide proof of the debt or the
name and address of the original creditor if the consumer disputes the debt
Credit Laws
Fair Debt Collection Practices Act
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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
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Staying Out of Credit Card Trouble
If possible pay off entire credit card bill every month
Don’t charge perishable items because you will be paying for them long after they are gone
Limit the number of credit cards you have
Shop for the credit card with the best terms
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Signs of Credit Trouble
Charge credit cards to the limitMake just the minimum monthly
paymentsUse one card to pay for anotherDo not know your total debtBorrow from family members to pay
debt
Continue...
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Signs of Credit Trouble
Afraid to open your credit card statements
Have little or no savingsUsing cash advancesDread answering phone
(continued)
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Debt Recovery Suggestions
Bump up your monthly payments Increase your income Distinguish between wants and needs Limit credit card use Delay gratification Budget Use cash Talk to your creditors if you have a
problem Seek advice - CCCS: 800-251-CCCS
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Pay Off Your Credit Card Quicker
Pay off the credit card with the highest interest rate first
Pay more than the minimum payment every month
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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 plan
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Consumer Credit Counseling Services
Budget Counseling
Debt Repayment Plan– you agree to not use the cards– pre-arranged agreement with creditor(s)
for reduced payment and interest in some cases
– you pay CCCS and they pay your creditors– CCCS will not put the repayment plan on
your credit report BUT creditors may
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Do’s and Don’ts
Do: Store your credit
cards in a safe place Notify your creditors
if you can’t make your payments on time
Track your expenses Order a copy of your
credit file regularly
Don’t: Charge more than you can
pay back on a monthly basis
Buy on impulse - delay gratification
Use one card to pay another
Buy items like groceries Pay just the minimum
payment
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For Individual Help Contact:
Consumer Credit Counseling Service
https://onlinecounsel.cccsatl.org/gheac.asp
866-829-3438
(referral #017)