warm-up what are three things you learned from watching maxed out? take out randys story
TRANSCRIPT
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Warm-up
• What are three things you learned from watching “Maxed Out”?
Take out “Randy’s Story”
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Credit:The Good…The Bad…The Ugly
http://www.hulu.com/watch/1389/saturday-night-live-dont-buy-stuff
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Target
• I can explain the different types of credit available
• I can identify the 3 Cs of credit
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Scary Stats
• 56% of college students report obtaining their first credit card at age 18.
• 83% of college students have at least one card, with the average carrying four cards
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Scary Stats
• 60% of students maxed out their cards their freshman year.
• 71% of young adults do not pay off their balance in full each month.
• 11% of college students make less than the minimum payment each month
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Scary Stats• Credit card balances among college
students increased 134% in the last decade
• The average balance on a students card is $2,169.
• Upon graduation, a students average credit card debt is nearly $4,000.
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What is the cause of this!!!???
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Not a good time to be young.
• Sky rocking college tuition costs• Less college funding, higher loan rates• Flat real wage growth (25-34 year olds)• Increase in under-and un-employment• Rising living expenses
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Abusive Practices Aimed at Young Adults
• High fees• Heavy interest rates• Complex terms
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Lastly…
• 22% of young adults have taken a job that they would have otherwise wouldn't have because they needed more money.
• 58% moved back home after college.
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Debt Hurts…Especially the young!
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What is Credit?
• “Buy now, pay later”• Supplying of money,
goods, or services at present time in exchange for the promise of future payment
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Types of Credit
Secured Loan• Fixed payments • Backed by collateral
–Assets that can be repossessed• Ex: mortgage
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Types of Credit
Installment Loan• Equal monthly payments• Fixed interest rate• Possible repossession if not paid
back• Ex: Car Loan
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Acceleration Clause
If one of more payments are missed, the remaining balance is due immediately.
READ THE FINE PRINT!
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Types of Credit
Open-end Credit• Interest rates can change• Interest charged on balance• Can charge up to certain limit• Ex: Credit Card
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Advantages:• Convenient for emergencies • Don’t have to carry cash• May receive bonuses• More convenient than writing checks• Consolidates bills into one payment
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Disadvantages:
• Interest (higher cost of items)• May require additional fees• May lead to over spending and debt• Credit score can be damaged
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Use Credit Wisely
You should use credit to buy:– House – Car– Education (student loan)
and you’ll avoid trouble
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The Three Cs of Credit:Are you credit worthy???
Character: The way you handle money and have repaid debt in the past.
– Credit Score
Capacity: Your ability to pay the debt after considering other monthly expenses.
– Income vs. Expenses
Capital: The value of your assets – Assets may be repossessed if you cant pay back
loan.
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Consequences of Irresponsible Credit Card Use
Denial of credit High interest rates Difficulty in renting an apartment Denied employment Shattered dreams Higher insurance rates Loss of friends
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Credit Tips
• Pay your credit card balance in full every month
• Pay your credit card bills on time • Apply for only credit cards that are needed • Keep track of all your credit card charges by
keeping receipts • Check your monthly credit card statement
for errors
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Avoid
• Making late credit card payments • Paying only the minimum payment • Exceeding your card’s credit limit • Charging items that you can’t pay off
immediately • Owning too many credit cards
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Shopping for the best card
• Low APR (Annual Percentage Rate)– Look out for teaser rates
• Annual fees• Fixed vs. Variable• Fees• Special features• Avoid store credit cards!!!!!!https://www.youtube.com/watch?v=JcPWjjAbTe0