1

Staying on Good Terms: Credit and Debt

2

Types of Credit

Short Term/OpenInstallment/ClosedRevolving

3

Beware of Predatory Lending

4

All Cards Are NOT Created Equal

Charge CardDebit/Check CardCredit CardSmart Card/Cash Card

5

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

6

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?

7

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)

8

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...

9

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)

10

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

11

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.

12

How to Obtain Your Credit Report

EQUIFAX: 800-685-1111www.equifax.comEXPERIAN: 888-397-3742www.experian.comTRANS UNION: 800-888-

4213www.transunion.com

13

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

14

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

15

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

16

Sets up guidelines for the handling of disputed charges on a consumer’s bill

Credit Laws

Continue...

Fair Credit Billing Act

17

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

18

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

19

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

20

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...

21

Signs of Credit Trouble

Afraid to open your credit card statements

Have little or no savingsUsing cash advancesDread answering phone

(continued)

22

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

23

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

24

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

25

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

26

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

27

For Individual Help Contact:

Consumer Credit Counseling Service

https://onlinecounsel.cccsatl.org/gheac.asp

866-829-3438

(referral #017)