Peterson's FAABteachersmanual Page 28
Teacher's Manual
Page 28
Overhead 12
Credit Card Basics
1. Credit cards charge an APR (Annual Percentage Rate) that averages
about 18% each year. This means that if you purchase an item at $100,
make minimum payments each month, and take eleven months to pay off
your purchase, it will actually cost you $109.16.
2. If you can, pay off your credit card balance each month in order avoid
costly interest charges. 58% of college students pay off their credit
balances each month.
3. A 90-day delinquency can ruin your credit. A credit report (history of
credit payments) can prevent you from getting credit in the future. Credit
card issuers will also charge additional money for a late payment. Late
payments can result in approval of money later for a car or house
purchase, apartment lease, or employment. PAY ON TIME.
4. Most college students are given a $500 to $2500 credit limit. This can
become problematic when a college student has four credit cards at their
maximum limit.
5. A credit card can help students to establish a credit history (something
that one needs when purchasing a big ticket item like a car or house).
Credit cards can also be used in emergencies.
