lesson eight

credit cards

overheads
 shopping for a credit card

costs:
Annual Percentage Rate (APR) or Finance (Interest)
Charges

Grace period

Annual fees

Transaction fees

Balancing computation method for the finance charge

features:
Credit limit

How widely the card is accepted

What services and features are available

choices & decisions credit cards overhead 8-A

calculating finance charges

cash advances:
You pay interest charges that accrue from the date of
the cash advances.

average daily balance:

You pay interest on the average balance owed during
the billing cycle. The creditor figures the balance in
your account on each day of the billing cycle, then
adds together these amounts and divides by the
number of days in the billing cycle.

adjusted balance:
You pay interest on the opening balance after
subtracting the payment or returns made during the
month.

previous balance:
You pay interest on the opening balance, regardless of
payments made during the month.

past-due balance:
No finance charge is added if the full payment is received
within
the grace period. If it is not received, a finance charge for
the unpaid amount is added on to your next bill.
overhead 8-B choices & decisions credit cards
 examples of finance charges

average adjusted previous

daily balance balance balance
monthly 1.5% 1.5% 1.5%

rate 18% 18% 18%

previous balance $400 $400 $400
payments $300 $300 $300

On 15th day (new balance =$100)

average daily balance $250* N/A N/A

finance charge $3.75 $1.50 $6.00

(1.5% x (1.5% x (1.5% x
$250) $100) $400)

* To figure average daily balance:

($400 x 15 days) + ($100 x 15 days) = $250 x 30 days

choices & decisions credit cards overhead 8-C

 comparing credit cards

Card 1 Card 2 Card 3

TD Platinum MBNA American
Visa Card Platinum Express Gold
Plus Rewards
Mastercard
$0 $150
Annual Fee $89
1 month
At least 21 At least 21
Grace Period Days days
30%
19.99% 19.99%
APR

No limit No Limit
$1000
Credit Limit Minimum

Varies Varies
Varies
Finance
Charge

Not stated Not stated

Method of
Calculating
Finance Charges
Cash advances 1% of 0
0 amount advanced
Transaction minimum $7.50
Fees

Full balance plus Full balance plus

Fees for Late Full balance interest interest
Payment plus interest

what to do if you are denied credit

overhead 8-F choices & decisions credit cards
if you think the reasons for the denial are valid:
Ask the creditor if you can provide additional
information or arrange alternate credit terms.

Apply to another creditor whose standards may be

different.

Do the things you need to do to improve your

credit worthiness (pay bills on time, increase
income, reduce spending, obtain a secured card,
etc.) and then reapply.

if you are not sure whether the reason for the denial
is valid:
Ask the creditor to explain why you were denied.

Review your credit history.

If you find your credit history contains errors,

take steps to correct the errors.

if you believe the reason for the denial is invalid and that
the creditor has discriminated against you:
Notify the Human Rights Commission or
Consumer Affairs department in your province.
They will investigate and report back to you.

If you can afford it, hire a lawyer to file suit against

the creditor. If the court determines the creditor
did discriminate, the creditor will be required to
pay you actual damages plus punitive damages.

choices & decisions credit cards overhead 8-E

reading a credit card statement

1 Y O UR

FIRST
BANK
CREDIT CARD
STATEMENT
Box 1234
Send Payments to:
Anytown, CANADA

Date Particulars Debits/Credits

Jan25 PaymentThankYou -168.80

Jan 15 Record Recycler Anytown, CANADA 14.83
Jan15 BeeforamaRestaurant Anytown, CANADA 30.55
Jan 18 GreatExpectorations Big City, CANADA 27.50
Jan 21 Dino-Gel Petorleum Anytown, CANADA 12.26
Feb 09 Shirts 'N Such Tinyville, CANADA 40.10

Account Number Balance On Last Statement Total Credits Total Debits My New Balance

4125-239-412 168.80 - 168.80 + 125.24 = 125.24

Interest Rate/APR Credit Limit

17.5% 1,200.00
John Doe
Statement Date Past Due
211 Elm Street
Anytown, CANADA 2/13/ 00.00
Due Date Minimum Payment

3/9/ 20.00

Amount Paid

Please make cheque or money order payable

to Your First Bank. Include account number Pleaseretain
on front. this portion

General Customer Inquiries: 1-800-555-1234

overhead 8-F choices & decisions credit cards

Report Lost or Stolen Cards: 1-800-555-5678

choices & decisions credit cards overhead 8-E

 dealing with billing errors

collection agencies act

Sets up a procedure for the quick correction of
mistakes that appear on consumer credit accounts.

You can challenge a billing statement for errors

such as charges for unauthorized purchases,
charges for items that were never delivered,
failure to credit a payment, etc.

You must notify the creditor of a disputed item

within 60 days.

Creditor must investigate and, within two billing

periods, either correct the mistake or explain why
the charge is not in error.

You cannot be billed for or forced to pay the

disputed amount until the creditor has finished
the investigation.

If it is determined that you are responsible for

the bill, you must be given the usual amount of
time to pay it.

Your credit history is protected during the dispute

process.

Creditor must supply customers with a

statement of their rights at the time the account
is opened and at least twice a year thereafter.

overhead 8-H choices & decisions credit cards

other credit card protections

prompt credit for payment

A card issuer must credit your account on the day the
issuer receives your payment, unless the payment is
not made according to the creditors requirements.

refunds of credit balances

When you return merchandise or pay more than you
owe, you have the option of keeping the credit
balance on your account or receiving a refund.

unauthorized charges
If you report your card lost before it is used, you
cannot be held responsible for any unauthorized
charges.
If your card is used before you report it lost, you are
usually liable for no more than $50.00 in charges.

disputes about merchandise or services

In some circumstances, you have the right to
withhold payment for unsatisfactory merchandise or
services. Otherwise, disputes must be resolved
directly with the merchant.

choices & decisions credit cards overhead 8-G

 credit card dos and donts

shop around
Look at various sources.

read and understand the contract

Read the contract carefully.

Dont rush into signing anything.

Once a contract is signed, get a copy of it.

Know the penalties for missed payments.

know your cost

Figure out total price when paying with credit.

Make the largest payments possible.

Know the penalties for missed payments.

Buy on instalment credit only after you have

evaluated all other possibilities.

Dont be misled into thinking small payments will

be easy.

overhead 8-J choices & decisions credit cards

how much can you afford?
(the 20 -10 guideline)

never borrow more than 20% of your yearly net income

If your net income (money after taxes) is $400 a
month, then your net income in one year is:
12 x $400 = $4,800
Calculate 20% of your annual net income to find
your safe debt load.

$4,800 x 20% = $960

So, you should never have more than $960 of debt

outstanding.

Note: Housing debt (i.e., mortgage payments)

should not be counted as part of the 20%.

monthly payments shouldnt exceed 10% of your

monthly net income:
If your take-home pay is $400 a month:

$400 x 10% = $40

Your total monthly debt payments shouldnt total more

than
$40 per month.

choices & decisions credit cards overhead 8-I

 lost or stolen credit cards

protecting your credit cards

When you first receive your credit card from the

provider, take time to read the attached
documentation. It will outline the procedure to
follow if your card is lost or stolen.
Some card providers may provide a credit card
registry as a convenient and safe way to keep track of
all of your card numbers for quick reference. A small
annual fee may apply for this
service.

Its a good idea to make a list of everything you

carry in your wallet, including credit card numbers.
Dont forget to keep the list separate from your
wallet or purse.
If your card is lost or stolen, report it promptly to
your credit card provider.
Each card provider will have their own procedures
to follow if your card is lost or stolen in Canada or
while away out of the country.

lost or stolen Visa card

First, call your issuing financial institution. If you

cant remember which one issued your card, call
the Visa International Global Customer
Assistance Service toll free, 24 hours a day at
(800) 847-2911. If you are out of the country, call
(410) 581-9994 collect.
overhead 8-J choices & decisions credit cards
 lesson eight
credit cards

student activities

choices & decisions credit cards overhead 8-K

 name: Jessica Bator date: November 8th2017

activity 8-1b choices & decisions credit cards

 shopping for credit

Credit card costs and features can vary greatly. This exercise will give you a
chance to shop for and compare the costs and features of three credit cards.

directions
Using the attached form, research the costs and features of:
Two major credit cards
One credit card from a department

store When youre done, answer the

following questions.

what did you find?

1. Which credit card has the highest annual percentage rate and how much is
it?

The visa card with an APR of 19.99%

2. What method is used to calculate the monthly finance charges for the first
major
credit card? Multiply the average daily balance by the interest rate, then divide by
365 then multiply by days in the statement

3. When does the finance charge begin to accrue on the credit card from
the local department store? After the grace period

4. Do any of the cards have annual fees? Yes

If so, which one(s) and how much is the fee? The visa card has a $89 annual fee

5. Is there a transaction fee on any card? Yes If

so, how much is it? Up to $5

6. Is there a minimum finance charge on either of the major credit cards?

Yes If

choices & decisions credit cards activity 8-1a

 so, how much is it? 19.99%

7. Does the first major credit card charge a fee for late payments? Yes If

so, how much is it? Your balance + interest rate

8. What is the grace period on the credit card from the local department
store? At least 21 days

9. Jamel wants to buy a new CD player that costs $450. According to his
budget, he can afford payments up to $62.00 per month. Which of the
three credit cards youve found would you recommend Jamel use to
purchase the CD player? The hudsons bay card because it has a fairly low
minimum payment percentage and the APR is lower than other cards
shopping for credit (continued)

use the following form to compare two or more credit cards:

card one card two

TD VISA PLATINUM TRAVEL AMERICAN EXPRESS GOLD
Credit Card REWARDS CARD
Charge card
Type of account:
Credit card
Charge card

Company name, TD Visa, Text available at TDHELP( American Express, Amex Bank of
address, phone 834357) Canada, P.O. Box 3204, Station F,
Toronto, ON M1W 3W7, 1-800-567-
2639

Web site https://www.td.com/ca/en/personal- https://www.americanexpress.com/ca/en/

banking/contact-us/ content/support-cardmember/contact-
us.html?page=CM&inav=ca_sitefooter_con
tact
Annual fee (if any) $89 $150

Grace period Minimum 21 Days Minimum 21 days

Annual Percentage 19.99% 30%

Rate (APR)

activity 8-1b choices & decisions credit cards

Finance charge
calculation method

Credit limit $1000 minimum No pre-set limit

Minimum payment Varies Must be paid in full

Other fees: Full amount due + interest Full amount due + Interest
Late payment

choices & decisions credit cards activity 8-1a

 name: date:

the statement

A credit card statement provides information such as how and when youve
used your credit card, how much you owe, how much interest youre paying
to use the card, how much your minimum payment is, and how much credit
you have left.
Knowing how to read your credit card statement can also help you catch
unauthorized charges and/or billing errors.
So, it can pay to know how to read the statement!

directions
Use the credit card statement on the following page to answer these
questions:

1. What is the date of the statement? 2/13

2. What is the Annual Percentage Rate (APR)? 17.5%

3. What is the new balance? 125.24

4. What was the previous balance? 168.80

5. How many charges were made during the billing cycle? 5

6. How many credits and payments were made during the billing cycle? 1

7. Were there any charges for late payments? No

If so, how much were the charges? N/A

8. What is the total amount of the credit line? $1200

9. What is the total amount of available credit? $1200

10. What is the total amount of charges made during the current billing
period? $125.24

activity 8-2b choices & decisions credit cards

11. What is the account number on the statement? 4125-239-412

12. Where should the payment be sent? Box 1234 Anytown, Canada

choices & decisions credit cards activity 8-2a

the statement (continued)

Send Payments to:

Box 1234

1 Y O UR Anytown, CANADA

FIRST CREDIT CARD

BANK STATEMENT

Date Particulars Debits/Credits

Jan25 PaymentThankYou -168.80

Jan 15 Record Recycler Anytown, CANADA 14.83
Jan15 BeeforamaRestaurant Anytown, CANADA 30.55
Jan 18 GreatExpectorations Big City, CANADA 27.50
Jan 21 Dino-Gel Petorleum Anytown, CANADA 12.26
Feb 09 Shirts 'N Such Tinyville, CANADA 40.10

Account Number Balance On Last Statement Total Credits Total Debits My New Balance

4125-239-412 168.80 - 168.80 + 125.24 = 125.24

Interest Rate/APR Credit Limit

17.5% 1,200.00
John Doe
Statement Date Past Due
211 Elm Street
Anytown, CANADA 2/13/ 00.00
Due Date Minimum Payment

3/9/ 20.00

Amount Paid

Please make cheque or money order payable

to Your First Bank. Include account number Pleaseretain
on front. this portion

General Customer Inquiries: 1-800-555-1234

Report Lost or Stolen Cards: 1-800-555-5678

activity 8-2b choices & decisions credit cards

 the statement answer key

A credit card statement provides information such as how and when youve
used your credit card, how much you owe, how much interest youre paying
to use the card, how much your minimum payment is, and how much credit
you have left.
Knowing how to read your credit card statement can also help you catch
unauthorized charges and/or billing errors.
So, it can pay to know how to read the statement!

directions
Use the credit card statement on the following page to answer these
questions:

1. What is the date of the statement? 2/13/01

2. What is the Annual Percentage Rate (APR)? 17.5%

3. What is the new balance? $125.24

4. What was the previous balance? $168.80

5. How many charges were made during the billing cycle? Five

6. How many credits and payments were made during the billing cycle? One

7. Were there any charges for late payments? No

If so, how much were the charges? None

8. What is the total amount of the credit line? $1,200

9. What is the total amount of available credit? $1,074.76

10. What is the total amount of charges made during the current billing period?
$125.24

11. What is the account number on the statement? 4125-239-412

12. Where should the payment be sent? Your First Bank, Box 1234, Anytown, Canada

choices & decisions credit cards activity answers 8-2a key

activity 8-3a choices & decisions credit cards