Credit Cards: More Than Plastic

Module 8.1

VOCABULARYCredit card: a plastic card providing a revolving loan to the holder for goods or services that must be paid back to the issuer on a predefined payment plan with interest if required. Credit cards are an example of revolving credit or open-end consumer credit.

Credit limit: the maximum amount set by the credit card issuer that one can charge

Revolving credit: one can continue to use the amount of credit allowed them as long as they continue to make payments

Managing Credit CardsPay your bill in full every time

you have one.If you must make payments,

remember you will have to pay interest until the bill is paid in full. Interest on credit cards is up to 30% today.

Taking cash advances is not smart. The interest rate on them is much higher than for regular purchases.

Credit Cards: Shopping Online

Module 8.2

Online Shopping Tips

Know exactly with whom you are dealing. Confirm the online seller’s physical address and phone number in case you have problems or questions and need to contact them.

Know exactly what you are buying. Carefully read the seller’s description of the product, including the fine print.

Know exactly the terms of the deal. Understand refund policies, warranties, delivery dates, etc.

Know exactly how much you will be charged. Include sales tax and shipping and handling in the total cost of the order.

Pay by credit card or charge card. Never send cash or a check; credit or charge cards provide more consumer protection in case of problems.

Print and save records of your online purchases. Keep them in a safe place until the transaction is completed and you are satisfied with your purchase or the warranty has expired.

Check the site’s security. Look for indicators that the site is secure, like a lock icon on the browser’s status bar or a URL for a Web site that begins “https:” (the “s” stands for “secure”).

Check the site’s privacy policy. If you cannot find a privacy policy or do not understand it, go elsewhere to shop.

Buying Online vs. Buying LocalOnline stores never closeShopping locally provides jobsMore variety of merchandise

available onlinePurchases are available for use

immediately when bought localBetter pricing is found onlineKnow exactly what you are getting

when purchased locallyLocal purchases are easily

exchanged or returned for refund

Your Credit Score

Module 7.3

VOCABULARY

Credit bureau: a business that gathers, stores, and provides information about individuals and businesses, dealing mostly about credit history

Credit history: a record of your past credit purchases and payments

Credit score/rating: the number that indicates how well you handle your credit

Credit report: a comprehensive report about your credit history to date

The higher your credit score, the more credit worthy you are. You will be rewarded with lower interest rates thus your payments will be lower.

Most landlords and potential employers check your credit score to find out how responsible you are. You can be turned down for a job or denied a place to live if you have a low score.

Lenders in the United States rely on three main credit bureaus: Equifax, Experian, and TransUnion. Because the information reported to each credit bureau may differ, you actually have three different scores, one from each credit bureau.

Negative information stays on your credit report for seven years.

Bankruptcy remains for a maximum of 10 years.

You should check your credit score and credit history once a year. If you find information in your credit history that is inaccurate or incomplete, you have the right to file a dispute with the credit bureau. Both the credit bureau and the company providing the information are required by law to investigate any disputed information. If the information is inaccurate, they are also required to correct it. Even though the dispute might not be resolved to your satisfaction, you can send the credit bureau a statement explaining your side of the story and ask them to provide a copy of your statement to anyone requesting information about you. However, you may have to pay a fee for this service.

Consumer Credit

Legislation

Module 7.4

Truth-In-Lending Act

Requires lenders to fully inform borrowers about the cost of credit in a loan or agreement.

Limits a person’s liability to the first $50.00 after reporting a lost or stolen credit card.

Fair Credit Reporting Act

Gives you the right to:know what is in your credit filefind out who has seen your filesee your file for free within 30

days if you are denied credit have inaccurate data

investigated, corrected, and deleted from your file

Fair Credit Billing Act sets the requirements for resolving

credit card (revolving credit) billing disputes. You have 60 days from receiving a bill to file a dispute. The company has 30 days to respond to the dispute. Within 90 days of receiving the dispute, the creditor must correct the error or show why the bill is correct. While the amount is in dispute, the creditor cannot charge interest on that amount.

Equal Credit Opportunity Act

protects you from discrimination in being granted or denied credit

cannot be asked certain questions when applying for credit

have the right to know why you have been denied credit

Electronic Fund Transfer Act

explains your rights when mistakes are made with an ATM transaction or if your ATM card is lost or stolen.

If you notify the bank in a timely manner, your bank must correct the mistake and not charge you for withdrawals made by someone else with your card.

If you delay in reporting your card lost or stolen, however, you can be liable for up to $500, or an unlimited amount if you do not report the problem for more than 60 days.

Fair Debt Collection Practices Act

protects consumers from abusive collection practices by creditors and collection agencies (threats and intimidation are not allowed)

debtors can’t be called at certain places like work

collectors can only call between the hours of 8am and 9pm

debt collectors must make sure the bill is accurate and allow the debtor to dispute it

Fair Credit and Charge Card Disclosure Act part of the Truth in Lending Act

requires that all credit card applications include information on the card’s key features and costs, including the APR, grace period, minimum finance charge, balance calculation method, annual fees, transaction fees for cash advances, and penalty fees such as over-the-limit fees and late-payment fees.

Consumer Credit Reporting Reform Act an amendment to the Fair Credit Reporting Act

requires free credit reports for the unemployed, persons on public assistance, and fraud victims

requires the full name of anyone requesting a credit report within the past year

requires credit bureaus to share corrections to your file

clarified when the seven-year period for negative information begins and raised the limits on what information can be reported longer than seven years

Credit Repair Organizations Act

makes it illegal for groups to make false promises or claims about improving your credit history

requires that you receive a contract before the services begin

prohibits them from charging you any fees until services are delivered

Credit CARD Act of 2009 Credit Card Accountability Responsibility and

Disclosure (CARD) Act Young people under age 21 who want to open a credit card

account need to show that they can afford to make payments. Otherwise, they will need a cosigner who is 21 or older (in most cases this must be a parent or guardian).

Card issuers may not raise the credit limit on accounts held by a college student under 21 and a co-signer without written permission from the co-signer.

Card issuers cannot provide tangible gifts (having monetary value) to college students on or near (within 1,000 feet) campus, or at campus-sponsored events, in exchange for applying for credit.

Companies can still give out gifts and promotional items as long as the student is not required to apply for a credit card in order to receive the gift.

Colleges must publicly disclose all marketing contracts made with credit card companies.