Credit Cards One of the most popular forms

Credit Cards One of the most popular forms of credit © Annie Patton Next Slide

Aim of Lesson To show a credit card works and how it differs from a debit card, plus the dangers of overusing a credit card. Previous slide © Annie Patton Next Slide

This lady likes shopping. Previous slide © Annie Patton However she does not always have the money to buy what she wants. Next Slide

Solution to her Problem ? ? So she applies to a bank or credit institution for a credit card. Depending on her credit history the bank will decide, to give her the card or refuse her. Different banks or credit institutions will have different conditions, so like any other form of credit it is important to shop around. Previous slide © Annie Patton Next Slide

So can she now buy and buy? Afraid not!! She will have a credit limit, which means she can only spend up to a certain amount. This amount will be different for different people, as it will depend on their financial circumstances. Also she will have to pay for everything she buys. Previous slide © Annie Patton Next Slide

Personal Identification Number • Around the time, one receives their card, they will also receive a Personal Identification Number known as their PIN. • They will need to remember this PIN each time they go shopping and are advised to be very careful, who they divulge it to. Previous slide © Annie Patton Next Slide

Shopping with a credit card 1. First they must sign their new credit card and then off they go to the shops to pick the items they like. 2. When the cashier asks for the money, they give the card to the assistant, who inserts it in a machine which will automatically verify the shopper details. 3. They are then asked to insert the PIN. 4. If there is no machine in the shop, they will be given a docket to sign and their signature checked against that on the back of the card. 5. If all is in order they are given a docket to prove they bought the goods and paid for them with the credit card. Previous slide © Annie Patton Next Slide

Where can one use a credit card? • In any shop, restaurant, hotel, garage etc that displays that credit card company logo? • Abroad, if the shop, restaurant, hotel, garage, ATM (Hole in the wall) etc displays that credit card logo. • One can instruct companies like a phone company or the ESB to send their bills to the credit card company. • Over the phone or on the Internet, but this involves a some risk, if it is an unknown company. Previous slide Next Slide © Annie Patton

Payment • Once a month the bank will issue a statement, showing all the transactions that involved the credit card that month. • This statement will show a minimum amount that must be paid before the end of the month. • However, if only the minimum amount is paid the rest of the amount owed will start to incur interest at a very high rate. • If the full amount on the statement is paid, no interest will be charged. Previous slide © Annie Patton Next Slide

Will the shop charge one more because they use a credit card? • No, they are not allowed to. • But the shop will have to pay a percentage of all their sales that were made by credit cards to the credit card companies. • However their sales will have increased, so their profit will have also increased. Previous slide © Annie Patton Next Slide

Will the bank charge for the privilege of having a credit card? • Most banks do not charge the customer, but instead make their profits by: – charging interest on overdue accounts, –from the income gained from the seller, who has to pay a percentage of all their credit card sales to the credit card company. • However a few banks do levy a charge. • The government has also levied a charge payable each year on each credit card issued. This charged to your account by the bank like a normal expenditure. Previous slide © Annie Patton Next Slide

Can one use their credit card to get cash? YES, but unless they have paid the money into their account first, they will be charged interest from the moment they withdraw the cash. So it is an expensive form of credit. Previous slide © Annie Patton Next Slide

Advantages of a credit card • • It is a safe alternative to cash. Helps one build a Good Credit History. Bails you out in an emergency. Click for more Gives you time to pay, if you have spent informatio money you do not have. n • Enables you to take advantage of bargains in sales etc. • No interest charged, if you clear your balance on time. Previous slide © Annie Patton Next Slide

Dangers of credit cards • Leads to overspending • Very high rate of interest, if total is not paid when due Previous slide © Annie Patton Next Slide

Precautions one should take with a credit card • • • Never keep your Personal Identification Number (PIN) with your card. Never write down your PIN, keep it in your head. Always sign your new Credit Card immediately you receive it. Record the number and expiry date and keep it separately in a safe place. Always know where your credit card is and keep it in a safe place. Be sure your Credit Card is returned to you after each purchase and that it is your own card that has been returned Check the amount shown on your voucher is correct before authorising the purchase by PIN or signing. Check the entries on your statement, as soon as you receive it - if any of the transactions have not been undertaken by you, contact the bank immediately. Do not divulge your Credit Card Number, PIN or Credit Card expiry date to anyone who unexpectedly rings you saying you have won a prize etc. When purchasing goods on the Internet, be careful that you are dealing with a reputable company before you give your credit card details. © Annie Patton Next Slide Previous slide

Lost or stolen • If one losses their credit card, they must notify the bank immediately and depending on the conditions on which the credit card was issued, they will only have to pay for a small percentages or none of the thief’s shopping. • However hopefully they was intelligent enough not to have their PIN with the card. Previous slide © Annie Patton Next Slide

Credit Cards vs. Debit Cards • Both can be used, as an alternative to cash. • Debit cards are used like credit cards, but with debit cards the money must be in your account before you use it, whereas with credit cards you can spend money that is not in your account. • No danger of getting into debt with a debit card. Big danger with a credit card. • You will not end up spending your income on interest with a debit card. Previous slide © Annie Patton Next Slide

Students and Credit Cards • A lot of students get into debt with credit cards, because they are short of money and often when away from home parents give them the card for emergencies, but what is an emergency. • If I don’t go out on a Friday night my friends will laugh at me. Previous slide © Annie Patton Next Slide

Shopping on the Internet using a credit card • Very useful, you give your PIN and the company charges the amount to your account. • Can be very dangerous, because you do not know, who the company is in a lot of cases and you could be charged more than the agreed amount or even receive no goods or services. Previous slide © Annie Patton Next Slide

For an online quiz, visit… http: //www. teachnet. ie/apatton/2006/creditcards. htm Previous slide © Annie Patton Next Slide

The End So I need to think before I use my credit card and. Previous slide © Annie Patton