Instant approval credit card offer

Becoming credit card savvy

FREQUENT FLYER MILES, no annual fee, 5.9% fixed introductory offer, 2% cash advance fee, variable rate, 12% APR, 25-day grace period. . . what does it all mean? Credit card availability combined with lack of knowledge can spell credit card disaster for young adults. Family and Consumer Sciences courses are the perfect place to understand and evaluate the ins and outs of credit cards.

We often see these "can't beat it" deals in our mail: annual interest rates as low as 3.9%, credit card offers for people with bad credit or no credit history, instant approval, travel bonuses, no cash advance fees . . . all of these offers sound good. It is the Family and Consumer Sciences course offerings that can teach students how to read the fine print.

The Internet can be a wonderful resource for finding up-to-date information about credit cards. Ask students to bring in credit card offers their parents have received at home. Visit the web sites of those banks to show students how to read between the lines of these offers.

Compare different credit card offerings by placing information on a white board or on an overhead projector. These data can also be put in a readable format in a computer database that can be altered over time. Discuss the pros and cons of each of the credit card summaries.

Review the following case studies to use as springboards for discussions about credit cards.

Case Study # 1

Mark and Janelle have been married eight months. They use their credit card to build their professional wardrobes, as well as buy small household items. Mark and Janelle expect to carry a credit card balance from month to month.

Case Study #2

Jason is single. He works for a pharmaceutical company and travels extensively. He uses his card to cover travel expenses. He has a five-state region, so most of his travel is by air. The company reimburses expenses connected with work. He is able to pay his balance in full each month.

Case Study #3

Karen is a single mother with two children. Although she is able to manage the family's financial needs successfully, there are times when she uses a credit card to cover unexpected needs. When Karen receives her statement, she tries to pay the balance in full. If she is unable to pay the balance in full, she makes the largest payment possible each month until the balance is clear.

Case Study #4

Jacob is a sophomore in college. On the advice of his parents, he secured a major credit card to meet emergency spending needs. His parents agreed to cover credit card expenses with the stimulation that it be used for emergencies or unexpected college expenses. He expects to use the cash advance feature.

Review the above scenarios, and ask your students the following:

* What is the best credit card terms for each of these scenarios?

* What can each of these people do to minimize credit card fees?

* If you had a credit card, how do you think you would use it?

* What credit card terms do you think would best suit this plan?

With the amount of credit card offers that cross our doorsteps every day, it is important we prepare our students with the tools to decipher exaggerated claims.

CREDIT CARD QUESTIONAIRE

Is there an introductory annual percentage rate (APR - the interest rate that will be charged against a credit card balance)? If so, what is it? How long does the introductory rate last?

? Once the account is established, will the APR be fixed (does not change) or variable (changes over a period of time)?

?If it is a variable rate, how is it calculated (is the amount compounded monthly or annually)? What is the current variable rate (when you first get the card)?

? If it is fixed, what is the rate?

?Is there a cash advance fee (fee for taking cash out, versus using the credit card to purchase an item)?

? If so, what charge will be assessed? Is the APR on cash advances different that the rate on purchases? If so, how do the rates compare?

?Is there an annual fee (a yearly charge for the "right" to use the card)? If so, what is the charge?

?Is there a payment grace period (a time period that the credit card holder has to pay off the card before a fee is charged)? If so, how many days does the account holder have to pay off the debt before finance charges will be calculated? What is the late payment fee?

?What is the over-the-creditlimit fee (the fee that is charged should the credit card holder exceed the amount of credit for which he or she has been approved)?

?Can you transfer the balances from other cards? For example, of you have a credit card that is charging you an 18% APR, can you move that balance to a card that offers 11% APR? If so, explain the process.

?What additional benefits does the card offer (travel discounts, long distance credits, points that can be used for purchases, etc.)?

Joan Meyer is in her 22nd year teaching Family and Consumer Sciences at Capitol High School in the Helena School District in Helena, MI.