Consumer Credit, Credit Cards, Personal Finance Advantages and Disadvantages

What is Consumer Credit?
Credit arrangement to receive cash, goods, or services now.
Bill me later. How are credit card purchases an advantage?
What are disadvantages? Lets talk.

Credit Cards
Retailers give us credit based on current credit score.
How we have paid other creditors. The ability we
have to pay, when payment is due. Buyer beware
manage personal finance carefully.

Personal Finance Goal
Pay off credit card debt early.
Buy promotional sales that offer
(No Interest if Paid in Full) 6, 12, 18 months.
Personal finance option, avoid paying extra
finance charge.

Interest Charge Calculation
Annual Percentage Rate (APR)
My Lowes account has 26.99% APR.
Balance subject to interest rate $3,320.32.
Interest charge $68.75 in February 2011.
March 2011, balance subject to interest rate
$4,191.22. What happened?

Payment Information
Making no additional charges, make minimum
payment required, it would take approximately
21 years to pay off. That is how credit cards
cost the consumer.

Identity Theft
Taking these four steps can protect you from fraud.
1) Never respond to email with your account
or social security number.
2) Upgrade to the latest Internet browsers,
anti-virus and anti-spy-ware software.
3) Know your account status. Don’t be fooled by false
email scams.
4) Learn to recognize phishing emails.

Advantages of Credit Cards
Bill Me Later (convenience)
Education Expense
Medical Emergencies
Safe Shopping
Traveling Expense

Advantages of Credit Cards are Hard to Resist
Bill me later offers to convenience of enjoying your purchase now.
Education expense gives us the ability to send our children to college.
Medical emergencies are always there, and the need to pay now is important.
Safe shopping, you no longer have to carry money while shopping.
Traveling expenses such as gasoline, hotels, car rentals are all necessary.

Disadvantages of Credit Cards
Credit Costs
Income Loss
Impulse Shopping
Psychological Stress

Disadvantages of Credit Cards Create a Personal Financial Hardship
Bankruptcy ruins your credit, takes years to straiten out
Credit costs the consumer finance charges, interest rate, and late fees.
Icome loss due to a tight budget, and not able to make that monthly payment
Impulse shopping leads to financial hardship, the whole family suffers.
Psychological stress of not being able to meet monthly payments required.

Information for Credit Counseling Services
Call 1-877-302-8775

Web Sites for Money Management

Financial Planning
The Wall Street Journal
The Financial Times

Personal Experience

Focus on Personal Finance
Jack R. Kapoor
College of Dupage

Les R. Dlabay
Lake Forrest College

Robert J. Hughes
Dallas County Community Colleges