Introduction The majority of Canadian have at least one and possibly multiple credit cards introduction Credit cards originated in the USA in the 1920s Individual companies offered them to people making purchases from those businesses ID: 152982
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Slide1
HOW CREDIT CARDS WORKSlide2
Introduction
The majority of Canadian have at least one, and possibly multiple credit cards.Slide3
introduction
Credit cards originated in the USA in the 1920s.
Individual companies offered them to people making purchases from those businesses.
Their use increased dramatically after WWII.
First universal credit card established in 1950.Slide4
Benefits of credit cards
Major source of identification.ConvenientSlide5
Credit card safety
Sign your card – as soon as your receive it.Enter your PIN in such a way that no one can easily memorize it.
Don’t leave your receipts behind
personal information on them may be taken.
Always shred credit card statements before recycling.Slide6
Credit card safety
Avoid giving your credit card number over the phone.Ensure you get your card back after you make a purchase.
Write “See ID” on the back of your card. This will trigger the merchant to ask for your ID.Slide7
Credit card applications
Annual Fee – a flat, yearly charge
Many companies offer “no annual fee” cards.
Some cards with fees will also come with benefits.
Grace Period – a time period, usually about 25 days, in which you can pay off your balance with out interest.Slide8
Credit card application
Annual Percentage Rate (APR) – the yearly rate of the finance charge.
Fixed Rate – does not change
Variable Rate – prime rate (which varies) plus added percentage.
Introductory Rate – a temporary, lower APR that usually lasts for about six months before converting to the normal fixed or variable rate.Slide9
Monthly payments
Visa and MasterCard offer revolving credit
.
They allow you to carry a balance, on which they charge interest.
They require you to make a minimum payment.
The minimum payment is usually 5% of your current balance.Slide10
Monthly payments
High-rate card – 23.99%
You spend $1000.
You make only the minimum payments, starting at $51.
You will make 77 payments, and will have paid $573.59
Low-rate card
– 9.9%
You spend $1000.
You make only the minimum payments, starting at $50.41
You will make 17 fewer payments, and will have paid only $176 in interest.Slide11
Qualifying for credit
Good Payment Record
Pay bills on time
Late payments can hurt your chances, or raise your interest rate.