1 / 0

Credit Cards

Credit Cards. Plastic Money!. Credit Cards. 90% of credit card purchases are impulse purchases! Only 54% of card owners pay off their balances each month!. Types of Cards. Charge Cards No pre-set spending limit Must be paid in full each month American Express Credit Cards

adem
Download Presentation

Credit Cards

An Image/Link below is provided (as is) to download presentation Download Policy: Content on the Website is provided to you AS IS for your information and personal use and may not be sold / licensed / shared on other websites without getting consent from its author. Content is provided to you AS IS for your information and personal use only. Download presentation by click this link. While downloading, if for some reason you are not able to download a presentation, the publisher may have deleted the file from their server. During download, if you can't get a presentation, the file might be deleted by the publisher.

E N D

Presentation Transcript

  1. Credit Cards

    Plastic Money!
  2. Credit Cards 90% of credit card purchases are impulse purchases! Only 54% of card owners pay off their balances each month!
  3. Types of Cards Charge Cards No pre-set spending limit Must be paid in full each month American Express Credit Cards Pre-set spending limit Allow you to carry a balance As long as you pay the minimum monthly payment VISA, Mastercard
  4. Credit Cards - Interest Rates vary on different cards Range from 15% - 25% annually Interest charged daily Daily rate = annual rate divided by 365 Charged on all balances after due date Interest is backdated to the date of purchase
  5. Credit Cards - Interest Interest is charged on cash advances immediately No grace period, interest accumulates immediately
  6. Credit Cards – Days Late Be careful calculating the number of days late… Example A Purchase made on December 3rd – not paid until January 5th. How many days in December didn’t you have it? 2 Days in December = 31 -2 = 29 How many days in January did you have it? 5 Total = 29 + 5 = 34 days
  7. Credit Cards Example Monica makes a $400 purchase on her VISA on January 5th. She receives her statement on the 20th, but does not pay it. Her next statement arrives on February 20th. Calculate the interest she is charged if her annual interest rate is 21%.

  8. Assignment

    Module 3 Lesson 4

  9. Installment Buying

    All for 3 easy payments of…
  10. Installment Buying Pay for a portion of the purchase now Remaining balance owing is divided into equal payments.
  11. Installment Buying Installment Price Sum of the down payment and all installment payments This price is usually higher than the cash selling price. Finance or Carrying Charges The difference between the installment price and the cash selling price
  12. Installment Buying Example A new washing machine has a cash selling price of $889.45 plus taxes. The store offers an installment plan for $150 down and $90/month for 12 months. Calculate the cash selling price of the washing machine. Calculate the installment price of the washing price.

  13. Installment Buying

    Assignment Module 3 Lesson 2

  14. Deferred Payment Plans

    No interest, no payments….
  15. Deferred Payment Plans Most often offered by furniture, electronics and appliance companies Payment is delayed on actual cost, but other fees must be paid up-front. Taxes, delivery charges
  16. Deferred Payment Plans Administration Fees Amount the company charges for the work involved in administering the deferred payment plan. Interest Not charged if the balance is paid in full on or before the due date.
  17. Deferred Payment Plans Amy wants to purchase a sofa. She can either pay for the sofa up front for $924.25 (plus tax) or she can use the stores payment plan. At the time of purchase she must pay the taxes, and a delivery charge of $25. If she selects the payment plan, she has one year interest fee, but must pay a $49.99 administration fee at the time of purchase. Compare the two purchase prices.

  18. Assignment

    Module 3 Lesson 3

  19. Personal Loans

  20. Personal Loans Allow you to borrow a specified sum of money and repay it over time Usually 1 – 5 years To qualify you must Be 18 years of age Have the 3 C’s required Character, Capacity, Capital
  21. Personal Loan Terminology Amortization Period The amount of time it will take to repay the loan Term The period of time where the loan conditions stay the same Not necessarily the same as amortization Cost of Borrowing The amount of total interest paid over the amortization of the loan.
  22. Interest Prime Lending Rate Referred to as “Prime” Baseline rate used by all financial institutions, set by the Bank of Canada Fixed Rate Loans Interest rates stay the same for the entire term, regardless of changes to prime. Variable Rate Loans Interest is charged in relation to Prime. Ie. Prime + 1% If Prime changes, so does the interest charged
  23. Our Calculations We will focus on fixed rate loans. Table provides monthly payment per $1000 borrowed. Multiply this value by # of 1000’s Example $3000 at 4.5% for 3 years $29.80 x 3 = $89.40
  24. Example Jesse needs a personal loan of $10,000. His bank offers him a three year loan at a fixed rate of 10.25%. Calculate the: Monthly payment Cost of borrowing (total interest paid)

  25. Assignment

    Module 3 Lesson 5 Quiz after next class!
More Related