How Credit Cards Work and How To Manage Them
Task: You will study two sections from the Bank of America Credit site. Then you will write two paragraphs (5 sentences or more for each) explaining what you learned.
Directions:
1. On the Bank of America site, click on How Credit Cards Work and Managing Credit Cards. Study the site thoroughly. Watch the videos and read the articles.
2. Then, post two paragraphs on this blog about How Credit Cards Work and Managing Credit Cards.
3. In addition, list a relevant website that relates to this topic.
4. Finally, make thoughtful reactions to two (2) students posts (you will need to wait for others to post before you do this).
Grading:
10 points - paragraph answering what you listened to and what you learned (5 sentences ore more)
5 points - listing a relevant website (i.e. - you can list your podcast here)
15 points - reacting to two fellow students work (make a thoughtful reaction to what students said.
= 30 points
Due Date: Friday at the end of class.
Goal: Understand How to Use Credit Cards and How to Manage Credit Cards.
credit cards work like a loan, unlike using a debit card you are using money from your own account. Using a credit card you are spending money that will be owed back called cash advance. since the credit card company is loaning you money you have to pay a transaction fee and a higher annual percentage rate (ARP). You should avoid using credit cards daily but should be used for emergency.
ReplyDeleteAn easy way to manage your credit card is to manage your credit limit. A credit limit is the maximum amount that the credit loaner allows a person to spend in a certain period of time. Going over your credit limit can have many consequences like over draft fees.when choosing a credit company to use you should compare them and see which one offers the most perks and benefits like rewards points.
Some pretty good points. credit limit is the easiest thing to look at but not so easy to stay below it depending on who you are which is why so many people fall under. nice comments.
Delete-Jack Molnar
- shawn
DeleteJanye- you had some pretty good points, and some really good facts about credit limit and how it is used.
DeleteCristina - I also learned about credit limit, and I thought it was interesting how having a high credit limit is good, not because you can spend all of that money, but because it makes your credit-to-debt ratio low.
Delete- shawn
DeleteA good link for more info is https://www.moneyadviceservice.org.uk/en/articles/managing-your-credit-card-account
Jonathan R
ReplyDeleteA credit card lets you burn through cash using a credit card – it resembles having an advance for the sum you spend utilizing the card relies upon how certain your card supplier is. On the off chance that you take care of the tab in full every month, you won't pay enthusiasm for what you've obtained. On the off chance that you make money withdrawals however, a premium is generally charged consistently from the day you take your money. On the off chance that you don't take care of any extraordinary balance in full, at that point interest will be charged. This record as a consumer will help you when it comes time to apply for greater advances like a home loan, or when you're going after a position or condo.
Overall, I had learned many things that are very vital in today’s society about managing credit cards. So what is a credit limit? A credit limit is the maximum line of credit extended to you by a lender. Some portion of your FICO rating is dictated by the amount of your all-out credit you use. Having a decent FICO rating can influence your capacity to get financing on things like a home or vehicle, start a business or land particular kinds of positions. By and large, you need to utilize 30 percent or less of your accessible credit; that implies keeping your month to month balance underneath $300 on the off chance that you have a $1,000 credit limit. Charging a lot on your Mastercard can have various negative results. Visa loan specialists may survey cheat charges, decline your credit restrain or even close your record on the off chance that you go over your farthest point constantly.
Good comments on managing your card. I have also learned many things from this lesson and also learned a few more things that I missed from your article. -Jack Molnar
DeleteThis is my helpful link, forgot to add it in. https://www.bankrate.com/finance/credit-cards/credit-card-tip/
DeleteJonathan R
Janye- Really good facts. You had some pretty good points, about credit limit and how to use a credit card.
DeleteVery detailed summary! I had the opportunity to also learn about managing credit cards as well as having good FICO score.
Deletethis is a good points on how to manage your credit card
Delete- Shawn
Jessica Ledesma: I think you made some interesting points sometimes circumstances in our lives out of the blue make it difficult to pay even minimum payments on time which can definitely our credit score and us in the long term but what you think bout reward credit cards or credit cards used for very specific purposes, for example sometimes you need to order online and when not continuous like online shopping a credit card can help. I see you also see building credit possibly dangerous as well even though it helps with loans which intself can be also avoided but not always. Credit cards are definitely a risk that depends on peoples circumstances.
DeleteCredit cards are very easy and simple to use, although they can put you in a hole if they are not used wisely.For this to not happen you need to maintain a good credit score. When you first look for a credit card, you want to think about what you often buy and from where. You will want to look at the rates and what might cause them to change for better or for worse. There are different penalty rates and different promotional rates for every card.
ReplyDeleteOne of the smartest things to do when you have a credit card, is to check and review your credit card statement. Mess-ups happen all the time on credit reports and it is very wise to check and make sure that you are not put in a worse place because of someone else's mistakes. You also need to know your credit limit and try hard to not go past it. You should pay your dues on time so that it does not cost you more money in the long run.
-Jack Molnar
I agree with this many credit cards may be simple to use, but we can easily abuse these to buy things we want. This information was very helpful. Jonathan R
DeleteSara D pd4
DeleteI also agree that credit cards can be simple to use. But many people over spend, as well as myself.
Janye-I learned that Credit card interest can turn your purchase into a costly expense. To calculate a credit card's interest rate, just divide the APR by 365. This will tell you how much interest you will be charged every day when you carry a balance from month to month. I feel like learning your credit card interest is very important because you need to know this stuff and if you don't then you won't really know how much money you have so you have to be careful. I also learned about paying the minimum payment on your credit card. This can actually save you a lot of money. Most credit cards only require you to make a minimum payment each month, which is typically a fixed amount, often 20$ to 25$, or a percentage of your balance, usually 1 to 3 percent. Paying the minimum is tempting, especially if your budget is tight. But the less you pay now, the more you'll pay later. Not all credit card rates are the same there are different card rates. That is why it is important to pick the credit card with the best rate so that you can save money. There are 5 different types of rates which are Standard rates, Variable Rates, The Penalty rate, Cash advance rate, and promotional rates. Pick the one that would save you money so you don't become broke.
ReplyDeleteI also learned about Managing credit cards and what to do with them. Lowering your interest rate with a credit card balance transfer can help control debt and pay off your balance quicker.if you are Keeping your PIN secure, Checking your bill, Plan to pay off in full each month, Avoiding the late payment trap, Avoiding the minimum trap, Keeping within your credit limit then you will be just fine. Your credit score will be perfect. That is why it is important to learn how to manage your credit cards. From reading these articles I learned a lot about credit cards and how they work.
I had also learned many things from the article. Credit cards can easily become a costly expense as we keep building up a balance, especially if you pay the minimum. It is very wise to invest in a credit card but be careful when using it. Jonathan R
DeleteVery interesting! I learned a lot about APR as well and also about managing credit cards.
DeleteI discussed the same topics you did in your summary. I think I would like to pay the full amount because I will no longer have to worry about it.
DeleteCristina
A credit card permits you to obtain cash from a bank to make purchases, regardless of whether you're buying anything of relevancy. You do need to pay it back by the end of the month.For this to not happen you need to keep up a better than average FICO evaluation. Right when you first quest for a charge card, you have to consider what you normally buy and from where.
ReplyDeleteNot paying for your credit card is very dangerous because it can affect your credit score and the willingness of people to lend you money or allow you. https://www.nerdwallet.com/blog/nerdscholar/credit-card/
-Jaivis
this is good points on how credit is used
Delete- Shawn
Angellise- I agree with you because a credit card is basically a buy now pay later luxury. It may be helpful in certain situations but it can really hurt a person financially if not used with precaution.
DeleteCristina Ledesma
ReplyDeleteThe videos from the website taught me a lot about how interest and debt accumulates over time. Khan had two examples, one where a person only paid the minimum amount, while the other person paid ten more dollars than the minimum. It was surprising how it took more than twenty years for the first person to pay off their $1,000 laptop. Then, I learned about how interest is determined using the average daily balance (debt during the cycle), which is determined by multiplying the amount of days by the balance, adding them together, then dividing by the days in a cycle. They then multiply that number by the days in a cycle divided by the days in a year.
The articles in the website also had interesting information that I did not know before. The website said that a high credit card limit is a good thing because that means the debt-to-credit ratio is more likely to be low. It seems obvious to me now, but I had not thought of that before. I found a website called, “the Money Advice Service” that had similar advice as “Better Money Habits.” It taught me about CPAs, which is when a company automatically charges you on your credit card. This can be problematic if you go over your credit limit by accident.
Angellise- The example about the person buying a $1000 laptop stood out to me because it showed me how paying a lower fee can have such a long term effect.
DeleteHere is a link to the website https://www.moneyadviceservice.org.uk/en/articles/managing-your-credit-card-account
ReplyDeleteCristina
Jessica Ledesma: That is a interesting point I feel as though credit cards have always been painted with a bad light because of the interest rates. I would like to further question your thoughts on credit cards what do you think is a good age for such a responsibility. College age seems good to start building but I'm not sure how much it can be for students to handle paying constantly when paying for college and other expenses, but definitely a goof responsibility to learn to manage.
DeleteThe videos and articles from the website help me understand how credit cards work and also how to manage them. One thing that stood out to me from this lesson was the video explaining "How Is Credit Card Interest Calculated?" Some things that I pulled from the video was interest being calculated over a billing cycle. For example, you had $100 balance on your credit card. And you continue to have $100 balance. You don’t do any spending, nor do you pay down the card, until October 6th. So let’s say that’s the sixth right over there, and that’s where you go and you buy yourself a nice sweater for $100. And so now you have a $200 balance on your credit card. And once again, that $200 balance, it continues – you don’t do any more spending or paying down. But you had sent a check in a couple of days ago and it finally gets registered with the credit card company on the 20th. And that check was for $150. So it pays down your balance, your balance would now go down from $200, since you paid $150, it would go down to $50. And then you don’t do any more paying, nor do you do any more spending, until the end of the billing cycle, just like that.
ReplyDeleteNot only do I have a better understanding of how interest is calculated but I also learned about managing credit cards in this lesson as well. Some things that I have learned from this lesson was choosing the right credit card, lowering your interest rate, and also building a credit card history.
Jessica Ledesma: Credit cards all slightly differ in the way they work in regards to how they let you borrow money from banks. Typically when looking into a credit card the cards specific regulations and how you use the credit card will highly impact your interest and charges and the different rates that you use all impacting your credit score once you make the first inquiry to get a credit card (whether or not you even get accepted for the card). Some credit cards are pretty stable in regards to interest charge but some change depending on situations, especially true when thinking about our financial habits. Financial habits can determine how much we are charged regarding billing cycles. Depending on how much we pay during out billing cycles we will see that our cost can vary significantly and it can all depend on the person at hand. When looking at https://www.experian.com/blogs/ask-experian/3-reasons-to-pay-more-than-the-minimum-on-your-credit-card/ and https://bettermoneyhabits.bankofamerica.com/en/credit/cost-of-paying-minimum-on-credit-cards the process of paying something down can really be impacted by your personal circumstance. Credit cards can also be used for credit card advance which is loans against credit card lines from credit card account in which.
ReplyDeleteWhen looking at all of these facts regarding how our credit score, which impacts financial relationship with banks, it shows how important it is to make sure that our information is protected and correct. This can be something that is impacted by numerous problems that can occur on purpose as well as unintentionally. Sometimes mistakes just happen either with purchases added by mistake by credit card companies or merchants. Sometimes credit cards are stolen or theft (identity) occur. These all have the potential of impacting your credit score and therefore financial life for years to come if not fixed. It is up to the credit card holder to protect information through vigorous which first ensure something is less likely to occur, marking credit cards and receipts and sealing information safely. If something occurs new information can be retrieved after informing credit card companies to ensure everything is good.
Jessica Ledesma: In further continuation to the links. The links were helping in seeing how paying in full your balance means no interest. And since you pay interest depending on your balance left throughout time interest can increase cost depending on how long you are paying. One of the links shows a video of adding up cost throughout years. If good with credit cards you are able actually able to help yourself and possibly save.
ReplyDeleteAngellise- I learned that using a credit card can help a person in many ways. If an individual is in a situation in which they don't have cash on them they can use a credit card. In the articles that I read it gave an example on how a person bought a laptop for $1,000. This person paid the laptop with his credit card so he had to pay a fee every month. He could pay the minimum amount or he could go higher. The article taught me that when he paid the lowest amount for the laptop each month it took him over twenty years to pay it off. It is best to pay the full amount each month and not the lowest amount because in the end it will cost more. Not only will it cost the individual more money, but, if the minimum payment is not fully paid it can lower his credit score.
ReplyDeleteI also learned that having too many credit cards is not always a good thing. Ten percent of a person's credit card is determined by the type of credit they have. Some examples are student loans or mortgage. Agencies want to look for a good mix. If all a person has is credit cards it will definitely not help their score.
Angellise- https://bettermoneyhabits.bankofamerica.com/en/credit/5-facts-about-credit-cards
ReplyDeleteSara Dansby Pd4
ReplyDeleteCredit cards are very easy and simple to use, although they can put you in a hole if they are not used wisely.For this to not happen you need to maintain a good credit score. When you first look for a credit card, you want to think about what you often buy and from where. You will want to look at the rates and what might cause them to change for better or for worse. There are different penalty rates and different promotional rates for every card. Some things that I pulled from the video was interest being calculated over a billing cycle. For example, you had $100 balance on your credit card. And you continue to have $100 balance. You don’t do any spending, nor do you pay down the card, until October 6th. So let’s say that’s the sixth right over there, and that’s where you go and you buy yourself a nice sweater for $100.