Foolproof Module 5 notes

Worthless Guarantees:

If the big words don't mean much, and the fine print at times says the opposite of the big words, what good are the guarantees? And here's what makes this even more scary: The credit card companies' way of presenting all this is generally legal. The credit card companies usually do explain everything: Some of the credit card companies warn you very clearly and in plain English. Some explain it all in the fine print and legalese. And even those credit card companies that try to trick you are more protected by the law than you are!

Federal Deposit Insurance Corporation (FDIC)

This agency preserves and promotes public confidence in the U.S. financial system by insuring deposits in banks and thrift institutions for at least $250,000.

The Office of the Comptroller of the Currency (OCC)

This agency writes and enforces rules for financial institutions, examines both bank and non-bank financial institutions, monitors and reports on markets, as well as collects and tracks consumer complaints.

Remember:

Credit cards have the potential to be useful. They can help in short term emergencies. And they can help you build credit. And it may makes sense to you to get a credit card, if you're careful and if you don't fall for the hype and gimmicks.

Question: How Can I Make Sure I Have The Money Each Month To Pay My Bill In Full?

Every time you charge something on your card, 00:24 00:47 Back Stop Session Forward put the same amount of money for that item in your savings account. 00:26 Every time you charge something on your card, put the same amount of money for that item in your savings account. 00:41 00:47

Here Are Some Potentially Terrible Things To Charge On Your Credit Card:

1. Taxes - The government uses processing companies to collect taxes from people that pay via debit or credit card. These companies charge a fee, ranging from 1.87 to 2.35. Even though that may seem like a small percentage, if you have to pay $3,000 in taxes and put it on your card, that 2.35% fee is costing you an additional $70. 2. College tuition - do not charge your college tuition on a credit card. getting a student loan is cheaper. Credit cards generally have higher interest rates and fees, and you have to start paying off your balance immediately. And on top of that, you will probably not be able to keep your balance below the 20% rule for "not paying off your credit card bill in full each month", will you? 3. Medical bills - Before you know it, your little visit may result in expensive scans or a stay in the hospital. And you may rack up big bills quickly. A broken arm surgery costs as much as $18,000. This may result in you not being able to pay off your bill. And bingo, you pay interest and may hurt your credit.

What Are The Most Important Rules I Should Follow If I Plan To Take More Than A Month To Pay Off My Card?

First, try not to get in this situation often. If you need a loan, go to a credit union or bank. Second, pay attention: It's very easy to mess up your credit when you finance your debt using a credit card.

suggestion

Get your first credit card and we suggest: Start out with just one, for now. In a year or so, if you manage that card well, it probably make sense to get a second card. Here is why: Two credit cards paid on time build more credit than just one. A second card also makes sense in a real emergency. If your first card is maxed out, you can use your backup card.

So Here's Our Point: Get Your First Credit Card Very Carefully. And Don't Get It Online.

Get your first credit card from a human being. Get your credit card from a place, where you can talk with a representative in person, if and when you have a problem with your credit card. Go to the bank or credit union where you have your checking account. If you've taken care of your checking account, that's the place to go. If you don't have a local banking relationship, get one! Back Stop Session Forward

Here's The Three "Guarantees" Credit Card Companies Don't Offer:

Guaranteed Date With The Person Of Your Dreams!#*+++**^^**+++**# Guaranteed Lifetime Of Financial Prosperity!#*+++**^^**+++**# Guaranteed Lifetime Of Happiness!#*+++**^^**+++**# BUT, GUESS WHAT: THEY COULD OFFER THOSE THREE GUARANTEES, TOO, AND IT WOULD MEAN NOTHING! "Guarantees" usually aren't worth much when it comes to credit cards. All they have to do is put one or all of these after it: ***1*++** All they have to do is use the words "up to..." That's all they have to do to make all their guarantees virtually worthless.

the grace period

How many days you have to pay your credit card bill in full before you're charged a lot of interest.

Should I Use My Card A Lot, Or Not?

If you're really going to be responsible and pay off your card every month, use it a good bit. Activity on your account helps build your credit.

When You Charge Something On Your Card, Put That Same Amount In Your Savings Account!

That means, for instance, every time you charge $100 on your credit card, make sure you put $100 in your savings account. And here's an easy way to do it: Make sure you have signed up for online banking for your checking account. Make sure you have a savings account linked to your checking account. Every time you use your credit card, transfer money from your checking account to your savings account. You'll be earning interest, and you'll always have money set aside for your credit card bill.

You need to know who might protect you if you get ripped off. Who regulates and watches all this checking account and financial transaction stuff?

The Federal Reserve Bank (aka "The Fed") You probably won't ever deal with the Federal Reserve directly. - The Fed isn't actually a bank you can walk into and deposit your paycheck. It is the central bank of the United States, created and overseen by Congress. It provides our country with a safer, more flexible and more stable monetary and financial system. The "Fed" mainly sets interests rates — the price everyone pays to borrow money. The Office of the Comptroller of the Currency (OCC) -You won't have to deal with these people. The OCC regulates and supervises all our banks, credit unions and other financial institutions. The Federal Deposit Insurance Corporation (FDIC) - The FDIC is actually really important for you. The FDIC protects your money when you put it in a financial institution. For instance, if a financial institution goes broke, the FDIC generally makes sure you get your money back (as long as it isn't over $250,000). National Credit Union Administration (NCUA) The NCUA does all that regulatory stuff for credit unions, instead of banks. The Consumer Financial Protection Bureau (CFPB) - You can connect directly with the CFPB if you think you've been treated unfairly when it comes to money stuff. They oversee financial products and services that are offered to consumers. They make sure the banks stick to the rules and treat consumers fairly. Pretty straightforward, right?

Consumer Financial Protection Bureau (CFPB)

This is an organization of national bank examiners, charged with maintaining the data and soundness of the banks they supervise.

Federal Reserve Bank (The Fed)

This is the United States central bank. It helps maintain high U.S. employment and stable prices for consumers.

The Big Difference In Credit Cards And Debit/Atm Cards:

With a debit card, you draw out your own money. You spend your own money. You don't get a bill when you spend your own money. Hey, it's your money! With a credit card, you always borrow money. You always create debt when you use a credit card. You always get a bill when you charge something on a credit card. Hey, it's the credit card company's money you're spending. Every time you use a credit card - even to buy a hamburger - you are borrowing money.

credit limit examples

Your credit limit is $1,000. 00:53 If you borrow $400 today, you could borrow an additional $600 tomorrow. 00:55 You then owe $1,000. 01:03 You can not borrow any more until you pay down your balance below a $1,000. 01:07 01:15