Using Credit Cards: The Role of Open Credit
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Definitions and Examples of Credit Credit
-- receiving cash, goods, or services with an obligation to pay later. – Examples -- auto loans or personal loans
Open
credit -- credit that you can use and repay at your pace so long as you pay the required minimum monthly payment. – Examples -- Credit cards or department store credit cards
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Why People Use Credit
For Convenience
For Emergencies
For Identification
To Make Reservations
To Consume Expensive Products Sooner
To Enjoy the Good Life
To Take Advantage of Free Credit To Consolidate Debts To Obtain an Education
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Credit Card Statements Billing Date- (Sometimes called the Closing Date or Statement Date) is the last date of the month for which any transactions are reported; this is generally the same date each month Due Date- Date, specified by credit card company, of when they should receive payment – The period between the billing date and due date is usually about 20-25 days – Watch the fine print! (Example: time of payment)
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Determining the Costs of Open Credit The
balance owed Interest rates Balance calculation method Cash advance costs The grace period The annual fee Additional or penalty fees Prentice-Hall, Inc.
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Interest Rates percentage rate (APR) – the cost of credit on a yearly basis as a percentage rate Teaser rates – introductory rates used to attract new customers, some as low as 2.9% Most credit cards compound interest Annual
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Balance Calculation Methods
Average daily balance, most common – Including new purchases – Excluding new purchases – Two-cycle
Previous balance – most expensive Adjusted balance – least expensive
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Buying Money: The Cash Advance An
extremely expensive way to borrow Interest begins immediately and may be at a higher rate than for purchases Usually there is a “cash advance fee” of 2% to 4% of the amount advanced Some cards require payment of the purchase balance before payment of the cash advance balance
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The Grace Period Normally
20 to 25 days, excluding cash advances Doesn’t apply if you carry a balance With no balance, you could avoid paying for a purchase for nearly 2 months Not all credit cards offer a grace period
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The Annual Fee Range
from $0 to $100 (American Express charges $300 for their Platinum card.) 70%of the 25 biggest card issuers don’t charge an annual fee. Merchant’s discount fee -- charged to merchants, typically 1.5% to 5.0% of the purchase amount
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Additional Fees Cash
advance fee Late fee Over-the-limit fee Penalty rates Be alert-“Important Notice of Change of Terms”
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Contoh KartuKeterangan Citibank
Citibank Gold Card
Citibank Silver Card
Suku Bunga a. Suku Bunga Pembelanjaan b. Suku Bunga Pengambilan Tunai Biaya Pengambilan Tunai Dikenakan atas setiap transaksi Penarikan Tunai dengan menggunakan Kartu Kredit Citibank
3.5% per bulan / 42% per tahun 4% per bulan / 48% per tahun 4% dari jumlah yang diambil atau 4% dari jumlah yang diambil atau minimum Rp. 50.000 minimum Rp. 40.000
6% dari jumlah Pembayaran 6% dari jumlah Pembayaran Biaya Keterlambatan Pembayaran Minimum yang tertunggak sampai Minimum yang tertunggak sampai Dikenakan bila pembayaran Anda diterima setelah lewat Tanggal dengan 1 bulan sejak tanggal dengan 1 bulan sejak tanggal Jatuh Tempo, atau bila jumlah pembayaran kurang dari Pembayaran penagihan sebelumnya. penagihan sebelumnya. Minimum Minimum Rp. 75.000 dan Minimum Rp. 50.000 dan maksimum Rp. 150.000 maksimum Rp. 100.000 Biaya Pemakaian di Luar Batas (Over Limit) Dikenakan bila penggunaan Kartu Kredit Citibank Anda melebihi Batas Kredit Biaya Penggantian Kartu Dikenakan atas setiap penerbitan Kartu Kredit Citibank baru sebagai pengganti Kartu Kredit Citibank sebelumnya yang hilang atau rusak dan telah dilaporkan kepada Citibank sesuai prosedur pelaporan kehilangan atau kerusakan Kartu Kredit Citibank Biaya Pengembalian Cek/Giro Dikenakan bila Anda membayar tagihan Kartu Kredit Citibank dengan cek/giro yang harus diproses melalui kliring dan ternyata kemudian cek/giro tersebut dikembalikan oleh Bank tertarik dengan alasan apapun Bea Materai Atas Lembar Penagihan Besarnya akan tergantung pada nilai pembayaran yang Anda lakukan Sampai dengan Rp 250.000 Di atas Rp 250.000 sampai dengan Rp 1 juta Di atas Rp 1 juta Biaya Sales Draft Dikenakan untuk setiap pemberian salinan atau fotokopi dari sales draft sebagai bukti penggunaan Kartu Kredit Citibank atas permintaan Anda Biaya Cetak Ulang Lembar Penagihan Dikenakan untuk setiap permintaan pencetakan ulang Lembar Penagihan yangInc. sebelumnya telah dikirimkan oleh Citibank kepada Prentice-Hall, Anda
Rp. 75.000
Rp. 50.000
Rp. 50.000 per kartu
Rp. 25.000
Rp. 0 Rp. 3.000 Rp. 6.000 Rp. 25.000
Rp. 30.000
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The Pros of Credit Cards Convenience
or ease of shopping Emergency use Consume and use before the purchase is fully paid for Bill consolidation Can be used in anticipation of price increases
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The Pros of Credit Cards (cont’d) Interest-free
credit Make reservations Use as identification A source of free benefits
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The Cons of Credit Cards It’s
too easy to lose control of spending. It’s, in general, an expensive way to borrow money. It’s an obligation of future income--you’ll have less to spend in the future.
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Choosing a Source of Open Credit Bank
credit cards
– Bank card variations Travel
and entertainment (T&E) cards Single-purpose cards
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Bank Credit Cards Issued
by banks, may charge annual
fees Visa and MasterCard franchise credit authorization systems Offer a variety of benefits May be “co-branded” or “rebate cards”
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Bank Card Variations Premium
or prestige
cards Affinity cards Secured credit cards
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Other Sources of Open Credit Travel
and entertainment cards require full payment monthly. Single-purpose cards may or may not offer revolving credit, but usually have no annual fee. Traditional charge accounts offer convenience of payment and service before billing.
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Know Your Credit Card Philosophy Credit
user
– Low APR Convenience
user
– Low annual fee – Long, interest-free grace period – Free benefits Convenience
and credit user
– Balance interest rate and annual fee for the lowest total cost
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Getting a Credit Card: The Five Cs of Credit Character Capacity Capital Collateral
Conditions
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Character adalah data tentang kepribadian dari calon pelanggan seperti sifat-sifat pribadi, kebiasaankebiasaannya, cara hidup, keadaan dan latar belakang keluarga maupun hobinya. willingness to pay. Capacity merupakan kemampuan calon nasabah dalam mengelola usahanya yang dapat dilihat dari pendidikannya, pengalaman mengelola usaha (business record) nya, sejarah perusahaan yang pernah dikelola (pernah mengalami masa sulit apa tidak, bagaimana mengatasi kesulitan) ability to pay Capital adalah kondisi kekayaan yang dimiliki oleh perusahaan yang dikelolanya. Hal ini bisa dilihat dari neraca, laporan rugi-laba, struktur permodalan, ratio-ratio keuntungan yang diperoleh Prentice-Hall, Inc.
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Collateral adalah jaminan yang mungkin bisa disita apabila ternyata calon pelanggan benar-benar tidak bisa memenuhi kewajibannya.
Condition, pembiayaan yang diberikan juga perlu mempertimbangkan kondisi ekonomi yang dikaitkan dengan prospek usaha calon nasabah. Ada suatu usaha yang sangat tergantung dari kondisi perekonomian, oleh karena itu perlu mengaitkan kondisi ekonomi dengan usaha calon pelanggan.
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Credit Evaluation: The Credit Bureau The
credit bureau: collects and reports information from creditors, public court records, and the consumer. Determining your creditworthiness -credit scoring determines if you qualify for credit and the interest rate offered.
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Information on Your Credit Report Personal – – –
demographics
age Social Security number addresses
Employment
history Credit history
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Information on Your Credit Report (cont’d) Criminal
convictions and judgments Previous two years of inquiries
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Factors That Determine Creditworthiness Annual
income Length of time at current residence Length of time at current job Type of residence Age Employment
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Factors That Determine Creditworthiness (cont’d) Number
of bank accounts Number of credit cards If you have a telephone Credit history Note: All the factors provide information historically linked with individuals that are good credit risks.
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If Your Application Is Rejected Apply
for a card with another institution Find out WHY you were rejected. Then, take steps to correct the problem.
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Managing Your Credit Cards and Open Credit Reducing
your balance Protecting against fraud Trouble signs in credit card spending Controlling spending If you can’t pay your credit card bills
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Reducing Your Balance Pay
more than the 2% to 3% minimum monthly payment Find a card that offers a lower interest rate
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Protecting Against Fraud Save
your credit card receipts. Compare them to your statement. Destroy old receipts. Use caution when giving out your credit card number. Never leave a store without your card.
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What to Do If You Can’t Pay Your Credit Card Bills “Act
your wage!!” Make sure you have the least expensive credit card. Consider using savings, if possible, to pay off debts. Consolidate your debts with a home equity loan or secured personal loan.
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Summary Two –
types of open credit
revolving credit lines and credit cards, including bank, T&E, and single purpose cards
Factors – – – – –
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that determine the cost of credit
interest rate balance calculation method grace period annual fees other fees
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Summary (cont’d) Advantages
of using
open credit – –
– –
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source of interestfree credit making reservations use as identification source of free benefits
Disadvantages
of using open credit – – –
easy to lose control of spending an expensive way to borrow money you’ll have less spendable income in the future
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Summary (cont’d) The –
“five C’s” of creditworthiness
character, capacity, capital, collateral, and conditions
National –
Experian, Equifax, and Trans Union
Methods –
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credit reporting bureaus of calculating finance charges
average daily balance, previous balance, and adjusted balance
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Summary (cont’d) Monitor
credit report information Control credit spending Recognize and avoid credit trouble Understand credit consumer protection laws
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VIDEO Prentice-Hall, Inc.
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