Consumer Action • Families and Credit Cards • American Express

Familiesand

Credit Cards

A project of Consumer Action and American Express

© Consumer Action 2010

Training overview

Consumer Action • Families and Credit Cards • American Express

Youth and credit cards

• Early discussions about how to use credit can help kids steer clear of trouble when they become adults

• You can teach your kids how to get the most out of credit

Consumer Action • Families and Credit Cards • American Express

What would kids need a credit card for?

• Emergencies• Field trips and other travel• Shopping

Consumer Action • Families and Credit Cards • American Express

Credit Yesteryear

• What was credit used for in your house growing up?

Consumer Action • Families and Credit Cards • American Express

Credit card eligibility

• Individual credit cards are issued to people 18 years and older

• Your child can be an authorized user on your credit card account

• You (the primary cardholder) are responsible for all payments

Consumer Action • Families and Credit Cards • American Express

Authorized users

• Credit card policies for authorized users (secondary accounts) vary widely: Minimum age Account numbers Billing statements Credit reporting Responsibility Marketing (888 - 5OPTOUT) Debt collection

Consumer Action • Families and Credit Cards • American Express

Take a Loan? Needs vs. Wants

• Please refer to the ‘Take a Loan? Needs vs. Wants’ activity sheet

• If you carry a credit card balance, you are taking out a loan to pay for your purchases

Consumer Action • Families and Credit Cards • American Express

Discussing credit cards with your children

• What would your child use credit for?• Teach wants vs needs• Brainstorm alternatives to financing wants• Set a spending limit• Determine which charges your child will be

responsible for paying

Consumer Action • Families and Credit Cards • American Express

Credit and spending management tools

• Online access• Statements• Alerts• Financial calculators

Consumer Action • Families and Credit Cards • American Express

Minimum payment example

• Balance: $1,000• Interest Rate: 15%• Minimum Payment: 3% ($30)

Consumer Action • Families and Credit Cards • American Express

Nine years

Do you know:

• How long it would take to pay off a $1,000 balance if only the minimum payment was made?

Consumer Action • Families and Credit Cards • American Express

$576 interest + $1,000 balance Total payback: $1,576

Do you know:

• How much you would pay in interest if only the minimum payment was made?

Consumer Action • Families and Credit Cards • American Express

• What would happen if you paid an extra $10 more per month ($40 instead of $30)?

Pay more than the minimum

Pay-off time would shrink to 3 years (instead of 9)

$206 in interest (instead of $576) You’d save $370

Consumer Action • Families and Credit Cards • American Express

Credit card statement

• Please refer to the Sample Credit Card Statement activity sheet

Consumer Action • Families and Credit Cards • American Express

Recipe for good credit

• A damaged credit record can affect whether you get loans, housing, even a job Pay the bill on time. Pay more than the minimum. Keep outstanding balance well under credit limit. Check for mistakes and errors in your credit report. Get free credit report: www.annualcreditreport.com.

Consumer Action • Families and Credit Cards • American Express

New rules to protect young adults

• Proof of ability to pay, or a cosigner, required for individual card applicants under age 21

• Parental approval required for credit increases on cosigned card

• Limited card marketing on/near campus• Disclosure of affinity deals between colleges

and card issuers

Consumer Action • Families and Credit Cards • American Express

Credit card alternatives

• Charge cards• Debit cards• Prepaid cards• Secured cards

Consumer Action • Families and Credit Cards • American Express

Case studies

• Please refer to the Case Studies activity sheet• Work with your group to answer the question

at the end of each case study

Consumer Action • Families and Credit Cards • American Express

Strategies for parents

• Brainstorm how best to help parents reach kids with smart credit card strategies

Consumer Action • Families and Credit Cards • American Express

Questions and answers

• Do you have any questions about the training?

Consumer Action • Families and Credit Cards • American Express

Thanks for participating!