Debt by Plastic

BY PLASTIC

THE HISTORY OF CREDIT CARDSHTTP://WWW.PBS.ORG/WGBH/PAGES/FRONTLINE/SHOWS/CREDIT/VIEW/

History

• Early 1900s• Plastic Debuts• Closed-Loop System• Bank Card Associations• Credit Card Processing• Other Issuers Join• The Future

http://www.creditcards.com/credit-card-news/credit-cards-history-1264.phphttp://blogs.creditcards.com/2008/09/credit-cards-50th-anniversary.php

September 15th, 2008

CREDIT CARDSTERMS + PROS & CONS OF CREDIT CARDS

Credit“Credit is the provision of resources (such as granting a loan) by one party, a creditor, to another party, a debtor also known as a borrower, where that second party does not reimburse the first party immediately, thereby generating a debt, and instead arranges either to repay or return those resources (or material(s) of equal value) at a later date. It is any form of deferred payment.”

“A debt is created when a creditor agrees to lend a sum of assets to a debtor. In modern society, debt is usually granted with expected repayment; in many cases, plus interest.”

Debt

APR“Lenders are required to quote all mandatory charges in the form of an annual percentage rate (APR)…

The goal of the APR calculation is to promote ‘truth in lending’, to give potential borrowers a clear measure of the true cost of borrowing and to allow a comparison to be made between competing products.”

The Good

• Accepted everywhere* world wide• Automatic record of your spending• Credit

Advantages to credit cards—how they can be useful in your life

The Bad• Fair interest rates• Trapped in credit card debt• Growth opportunity for credit card companies• Reckless borrowers and spenders• America’s youth

Disadvantages to credit cards—how they get you into trouble

The Ugly

“Co-signed loan for beau's brother” –Amina

“My mom and a timeshare” –Irritated Child

“Run the numbers before you buy a car” –Regretful Buyer

“In the beginning” –Derek

“Why available credit is important” –Verne

“The sting of credit cards” –Fasion Slave

“Trashy sofa trashes credit” – Barbara

“Loan for a worthless, unfinished certification”– Mitchell

Horror stories of financial blunders concerning credit cards

* Total surveyed approx. 40 people

TIPS ON HOW TO USE YOUR CREDIT CARD WISELY

EIGHT THINGS A CREDIT CARD USER SHOULD KNOW

1). The "universal default" clause 2). Your credit score3). Restrictions on late penalty fees4). Read the fine print5). Pay attention to your credit card account6). Federal limit on interest rates 7). Bankruptcy and credit card debt8). You can get help

Smart Strategies!

1. DEBIT CARD No loans extended Linked to your bank

account No bill Regular statements Issued by most banks

2. LOW LIMITControl reckless

spendingDevelop good habitsx Charged with interest

on unpaid borrowing

HOW TO AVOID FINANCIAL BLUNDERS BEWARE: BEHIND THE TRICKS CREDIT CARD COMPANIES USE

Beware1. The old bait & switch2. Musical address3. Late fees in minutes4. Over-the-limit fees5. Cash advance fees &

rates6. Reverse the late

payment, but up the rate 7. Increasing the rate based

on other accounts8. Fixed rates aren't fixed 9. Raising your rate for no

reason10."Free gifts" that cost a

bundle

11.Credit card theft insurance

12.Selling disability coverage

13.Setting low minimum payments 

14.Cards that cost more in fees than they give in credit

15.Balance-transfer fees & disappearing low rates

16.0% offers—with a big catch

17.Charges for charging abroad 

18.Shrinking grace periods19.Pre-paid gift credit

cards worth less than you pay

20.Is anyone there? 

20 Sneaky Credit Card Tricks

AMERICAN EXPRESSVISA MASTERCARDDISCOVER CARD

JP MORGAN CHASE (visa) CAPITAL ONE (mastercardCITIBANK (visa & mastercard)FIRST PREMIER BANK (mastercard)HSBC BANK (mastercard)

EXCELLENT CREDITGOOD CREDITFAIR CREDITBAD CREDITLIMITED or NO CREDIT HISTORY

LOW INTEREST CREDIT CARDSCredit Cards with 0% intro APRs & low fixed rate offers

BALANCE TRANSFER CARDSTransfer a high interest balance onto a low APR credit card

REWARDS CREDIT CARDSCredit cards that “reward” you for your purchases

CASH BACK CREDIT CARDSCredit Cards that allow you to earn cash back on purchases

AIRLINE CREDIT CARDSEarn frequent flyer miles with an airline credit card

INSTANT APPROVAL CARDSGet approved instantly on select credit cards from specific banks

PREPAID & DEBIT CARDSControl your spending with debit cards, prepaid debit cards, & prepaid credit cards

STUDENT CREDIT CARDSCredit cards for high school & college students

WORKS CITEDBankrate.com. “Readers tell their credit horror stories.” MSN Money. 2009. 27 April 2009.

<http://moneycentral. msn.com/content/Banking/P63561.asp>.

CreditCards.com. 2009. 27 April 2009. <www.creditcards.com>.

Council for Economic Education. 2009. 27 April 2009. <http://www.councilforeconed.org/>.

“Eight Things A Credit Card User Should Know.” Secret History of the Credit Card. PBS: Frontline. 27 April 2009. <http://pbs.org/wgbh/pages/frontline/shows/credit/eight/>.

Fleitas, Amy C. “20 Sneaky Credit Card Tricks.” Bankrate.com. 30 August 2005. 27 April 2009. <http://www.bankrate.com/brm/news/cc/20021106a.asp>.

Foundation for Teaching Economics: Promoting Excellence in Economic Education. 27 April 2009. <http://www.fte.org/>.

Gardner, David and Tom. The Motley Fool Investment Guide for Teens: Eight Steps to Having More Money Than Your Parents Ever Dreamed Of. New York: Simon & Schuster, 2002. 89-97.

Gerson, Emily Starbuck and Ben Woolsey. “The History of Credit Cards.” Creditcards.com. 18 December 2007. 27 April 2009. <http://www.creditcards.com/credit-card-news/credit-cards-history-1264.php>.

Secret History of the Credit Card. Dir. David Rummel. Prod. David Rummel and Nelli Kheyfets. 23 November 2004. PBS: Frontline. 27 April 2009. <http://www.pbs.org/wgbh/pages/ frontline/shows/credit/>.