a dealing with dollar $ workshop understanding credit and debt

a Dealing with Dollar$ workshop

Understanding Credit and Debt

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

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.

Forms of credit and loans

Credit CardMortgagesLines of Credit

The total amount of money we owe

Debt

Tim Horton’s sells…

Toyota sells…

Dominion sells…

A Bank sells…

Borrowing

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?

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

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.