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a Dealing with Dollar$ workshop
Understanding Credit and Debt
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Money that is available to us for borrowing
What promise is involved with use of credit?a. To share what you have boughtb. To send them a thank you cardc. To repay using future income
Credit
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Good or Bad?
“Good Credit” should improve someone’sfinancial position. What they have bought will increase in value over time.
“Bad Credit” won’t improve someone’sfinancial position. What they are buying has novalue or will decline in value.
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Forms of credit and loans
Credit CardMortgagesLines of Credit
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The total amount of money we owe
Debt
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Tim Horton’s sells…
Toyota sells…
Dominion sells…
A Bank sells…
Borrowing
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Interest rates
This is the cost of borrowing money.
You get a loan of $1000 at a rate of 5%What is the cost of borrowing the $1000?
What if the interest rate is higher at 12%What is the cost of borrowing the $1000?
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Debt management and repayment Don’t take on more debt than you can
handle Manage you debt by making payments on
time
To pay off debt Sell possessions Consolidate your debts Go to a credit counsellor Bankruptcy
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Credit Rating and Credit Scores
A ______ ______ is based on your record of repaying money that you have borrowed.
A ______ ______ is an estimate of whether or not you can repay credit.
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