# Presentation: 520484

## C.A.R.E.

**Credit Abuse Resistance Education**
**A program of:**
**WV State Bar Association **
**WV Bankruptcy Courts**
**WV Bankruptcy Law Committee**

## What if You Bought...

**A plasma TV for $1,200**
**A computer for $500**
**A new car stereo for $300**
**	****	****Totaling: $2,000**
**You use your credit card to buy the system making monthly payments of $300**
**Assume you never miss a payment and the annual percentage rate is 8%**

##          How Much Would it Be?

**Your total cost would be ****$2,052**** and it would take you ****7 months**** to pay for it!**

## What If...

**Your credit rating is poor and you must pay an interest rate of 24%**
**You also only pay the MINIMUM MONTHLY PAYMENT of only $50 per month**

- 23% APR

- 18% APR

## Now, How Much Would it Be?

**It would take you ****82**** months ****(almost 7 years)**** to payoff the system**
**Your total payments would be ****$4,062**

## Your Choices

**Pay $2,000 cash**
**Pay $2,052 over seven months**
**Pay $4,062 over seven years**

## How Much Could I Save?

**	****If you took the $2,000 you save as a result of paying cash for the stereo and invest it together with $2,000 every year until you are age 60... **

## ...MILLIONS

**	****You would have a nice fat bank account totaling****  $****1,200,000****!**

## What is Credit?

**Credit is the ability to borrow money**
**Borrowing is the creation of debt**
**Debt is what you owe**

## Reasons for Having a Credit Card

**Emergencies**
**Large purchases (necessities)**
**Establish a credit history**
**Identification**
**Safety**

## Types of Cards

**Debit Cards**
**When used, money is drawn directly from your bank account, just like writing a check**
**If there is no money in the account, the card cannot be used**
**Debit cards do not extend credit**

## Charge Cards
Issued by retail stores to be used exclusively at that particular store (such as Macy’s, Best Buy or Sears)
If a balance is carried from month to month, the interest rate is usually in excess of that offered by other card issuers

**Issued by retail stores to be used exclusively at that particular store (such as Macy’s, Best Buy or Sears)**
**If a balance is carried from month to month, the interest rate is usually in excess of that offered by other card issuers**

**Types of Cards**

## Types of Cards

**Credit Cards**
**Involves the extension of credit by the card issuer**
**Credit cards are accepted at almost any store**
**If a balance is carried from month to month, interest rates are set forth in the cardholder agreement   **

## What is Interest?

**Interest is the amount that a lender charges to borrow money**
**The higher the interest rate, the more money you pay**
**Interest rates vary from company to company**

## What is a Budget?

-   _**INCOME**_
**  ****Gross wages****	****  $2,000**
**  ****Payroll deductions **_**(400)**_
**  ****Net monthly pay****	****  $1,600**

_**EXPENSES**_
**Rent****	****	****	****$   500**
**Utilities****	****	****     100**
**Food****	****	****	****     200**
**Clothing****	****	****       20**
**Laundry****	****	****       20**
**Transportation****	****     200**
**Recreation****	****	****       30**
**Insurance****	****	****       90**
**Installment Payments     350**
**Misc. Expenses****	****       50**
**Total Expenses****	****$1,600**

## What is so importantabout Good Credit?

**Your history of payments, employment, and salary makes you a good candidate for a loan**
**You can get a better interest rate – lower payments**
**You will be viewed as financially trustworthy – better loan terms**
**May help you rent an apartment and obtain employment – most landlords and prospective employers will look at your credit report**

## What is so importantabout Bad Credit?

**Your history of late payments, not paying your debts or borrowing too much money makes you a poor candidate for a loan**
**You will pay two or three times more than the original price**
**You may have trouble getting a loan,    a credit card, a place to live,                    a student loan or employment**

## Consequences of Credit Abuse

**Divorce or relationship problems**
**Depression or suicide**
**Bad credit rating**
**Reduced performance at school or work**
**Being turned down for a loan for a house, car or job**
**Having to drop out of school**
**Not having money to retire or help your children**
**Creditors calling your home or work**
**Being sued and having judgments against you – wages garnished**
**Bankruptcy**

## Simple Rules to Remember

**Have a budget and live within it**
**Don’t have more than one credit card**
**Shop around and get the best deal**
**If you can eat it, drink it, or it costs less than $10, don’t charge it**
**Use a debit card, check or cash whenever possible**
**Pay off the balance every month**
**Never make just a minimum payment**
**Understand the difference between needs     and wants**
**If you are borrowing to pay a credit               card debt – STOP – you are in trouble**