Credit Vs. Debit cards

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Credit Vs. Debit cards. What are Credit Cards?. Pre-approved credit which can be used for the purchase of items now and payment of them later. http://www.youtube.com/watch?v=B9WZyWaGa50 http://www.youtube.com/watch?v=jjAmOtnFgcU. Why Use a Credit Card?. - PowerPoint PPT Presentation

Transcript of Credit Vs. Debit cards

  • Credit Vs. Debit cards

  • What are Credit Cards?Pre-approved credit which can be used for the purchase of items now and payment of them later.

  • http://www.youtube.com/watch?v=B9WZyWaGa50 http://www.youtube.com/watch?v=jjAmOtnFgcU

  • Why Use a Credit Card?Proper use can help establish good credit ratingConveniently accepted across United States and abroadEmergency buying powerAdditional form of identificationRecord of purchases on bill statementOften required to hold a reservation

  • Why Not Use a Credit Card?Improper use can damage credit ratingHigher risk for impulsive buying and overspendingDebt trap when used unwiselyExpensive way to borrow due to high interest ratesLess to spend in the future due to paying off purchases from pastPossible hidden fees & surchargesPrivacy is an increasing concernIdentity theft easier

  • Obtaining a Credit CardComparison shop when choosing the right cardKnow the factsTerms and conditions of credit card accounts differBe aware of hidden costs of card(s)Federal Truth in Lending ActRequires card issuer to display the cost of credit card Schumer Box: easy to read box format

  • A Schumer Box you May Expect To See

  • Annual Percentage Rate (APR): interest rate charged for amount borrowed in terms of percentage per yearGrace Period: amount of time allowed before finance charges (interest or cost of credit) are appliedA Schumer Box and Credit Card Terms Explained

    Annual Percentage Rate for PurchasesGrace Period for PurchasesMinimum Finance ChargesBalance Calculation Method for PurchasesAnnual FeesTransaction Fees for Cash AdvancesLate Payment Fees

    19.9%

    Not less than 25 days$.50 when a finance charge at a periodic rate is chargedAverage daily balance method (including new purchases)$20 per year2% with a minimum fee of $3

    $29

  • Minimum Finance Charge: minimum amount charged for card useBalance Calculation Method: method used to determine balance including finance chargesA Schumer Box and Credit Card Terms Explained

    Annual Percentage Rate for PurchasesGrace Period for PurchasesMinimum Finance ChargesBalance Calculation Method for PurchasesAnnual FeesTransaction Fees for Cash AdvancesLate Payment Fees

    19.9%

    Not less than 25 days$.50 when a finance charge at a periodic rate is chargedAverage daily balance method (including new purchases)$20 per year2% with a minimum fee of $3

    $29

  • Annual Fees: yearly charge for credit card ownershipCash Advance Transaction Fees: cash withdrawal feesLate Payment Fees: penalty fee for payments not made by the due dateA Schumer Box and Credit Card Terms Explained

    Annual Percentage Rate for PurchasesGrace Period for PurchasesMinimum Finance ChargesBalance Calculation Method for PurchasesAnnual FeesTransaction Fees for Cash AdvancesLate Payment Fees

    19.9%

    Not less than 25 days$.50 when a finance charge at a periodic rate is chargedAverage daily balance method (including new purchases)$20 per year2% with a minimum fee of $3

    $29

  • Opening a Credit AccountApplicant completes a credit applicationLender conducts a credit investigationApplicant is given a credit ratingLender accepts or denies the credit requestIf accepted, applicant evaluates the credit card details (USE THE SCHUMER BOX!)Applicant accepts or refuses credit terms

  • Understanding the BillMinimum Payment Due: minimum amount to be paid If this amount is paid and a balance is left on the account, additional finance charges will be included in the following months balancePast Due Amount: the previous amount due which was not paid before the due dateDue Date: the day by which the company requires a payment to be madeNew Balance: the total amount owed on a credit card

  • Understanding the Bill (continued)Credit Line: the maximum amount of charges allowed to an accountClosing Date: last day for transactions to be reported on the statementCharges, Payments, and Credits: the transactions which occur with the use of a credit cardFinance Charge: charges assessed for credit card use

  • Using a Credit Card Properly Only use when there is no doubt about ability to pay-off the charges at the end of the billing cycle Record all expenses and keep receipts Check credit statement for errors Always pay off balance completely and timely

  • Sign card with signature and Please See IDDo not leave cards lying aroundClose unused accounts in writing and by phone, then cut up the cardDo not give out account number unless making purchasesKeep a list of all cards, account numbers, and phone numbers separate from cardsReport lost or stolen cards promptly Safety Tips

  • Are Debit Cards a type ofCredit Card?NO!Debit=CreditDebit cards allow payment and purchaseto happen simultaneouslyDebit Cards are:Not the same as credit cardsNot a form of credit at allDirectly linked to your bank account.

  • What are debit Cards?Debit card is a plastic card which provides a alternative payment method to cash when making purchases.

  • Why Use a debit Card?It is used instead of a check to make purchases, anywhere Visa is accepted It is used instead of a credit card to pay bills such as utilities, insurance and car payments Point-of-sale funds are drawn from primary checking account PIN-system security Change your PIN at any Merchants Bank branch No annual fee Choose from three card designs

  • Why Not Use a debit Card?Some banks are now charging over-limit fees or non-sufficient funds fees based upon pre-authorizations.Many merchants mistakenly believe that amounts owed can be "taken" from a customer's account after a debit card (or number) has been presented.In some countries debit cards offer lower levels of security protection than credit cards.

  • This highly competitive market has resulted in impressive card growth

  • http://www.youtube.com/watch?v=kHfN-YUkH1Ehttp://www.youtube.com/watch?v=eN1eW_9uuAA

    **Discussion Topics:Ask people to give their answers to What are Credit Cards? Before giving the formal definition. *Discussion Topic:What other reasons can the students come up with for having a credit card, or ask them for their ideas before presenting the ones on the slide. *Discussion Topic:What other reasons can the students come up with for not having a credit card, or ask them for their ideas before presenting the ones on the slide.

    **Schumer box source: www.onecreditguide.com/Basics/Fine-Print.htm

    **Discussion Topics:Ask people to give their answers to What are Credit Cards? Before giving the formal definition. *Discussion Topic:What other reasons can the students come up with for having a credit card, or ask them for their ideas before presenting the ones on the slide. *Discussion Topic:What other reasons can the students come up with for not having a credit card, or ask them for their ideas before presenting the ones on the slide.