CREDIT Credit Cards AdvantagesDisadvantages Bankruptcy Credit Cards Credit

CREDIT Credit Cards Advantages/Disadvantages Bankruptcy

Credit Cards • Credit is the amount of financial trust extended to a person/business by a lender – A loan – Allows you to buy now – pay later – Major Credit cards (accepted most places): Visa, Master Card, American Express, and Discover – Store Credit cards: (for use in that store) Target, Kohl’s, Macy’s, Walmart, Lord & Taylor

Credit Advantages • Purchase now instead of later • Buy major items without having to save for the entire purchase • Enjoy goods/services without needing money • Accepted almost everywhere • No need to carry cash • Shop on line and phone • Available in case of emergencies • Accurate record keeping Disadvantages • Fees: interest, finance charges, annual fees • Spending future earnings, may not be able to buy in the future • Encourages impulse buying – If unable to pay bill = repossession of items (car, houses) • Poor credit rating if not paid on time

Credit Card Info. • If stolen, owner only responsible for first $50 – Protect your card and account no. – Easy to steal or assume someone’s identity to open cards • Must be 18 years of age and have an income – No income, must have co-signers • Provides excellent record keeping opportunities • Check credit report – shows all accounts, loans, credit cards – Equifax – Trans Union – Experian • What’s your FICO score? – – Median 720 Highest 850

Bankruptcy • CHAPTER 7 – Forces the liquidation of all assets to pay creditors • CHAPTER 11 – Allows companies/corporations to reorganize their debt or rehabilitate and re-organize their financial structure. Propose a plan that acceptable to all parties. • CHAPTER 13 – Enforces a repayment program without forfeiting property and requires the debtor maintain a source of income and adhere to payment schedule.