Analyzing a Credit-Card Statement

1
Analyzing aCredit-Card Statement

Activity 3.3
2
Using credit cards wisely

• Video 3 introduces key ideas about credit cards
• Many people use credit cards wisely, as for
  emergency situations
• But credit cards can fool you and you may end
  up in debt over your head

3
Credit cards vs. debit cards

• Read Part 1 of Student Activity 3.3 carefully.
• Questions for Discussion A through C refer to
  this reading

4
Questions for discussion A

• What is a debit card?

5
Questions for discussion B

• What is a credit card?

6
Questions for discussion C

• What are three tips for using a credit card
  wisely?

7
The big list using credit wisely

• Have only one card
• Close any credit-card accounts you dont use
• Shred unused credit-card applications
• Pay off the monthly balance
• Shop for a card with a low interest rate and no
  annual fee
• Use your card for travel and emergencies
• Use credit-card records to track your spending
• Avoid using your card for minor purchases

8
An important exhibit

• Read Part 2 of Student Activity 3.3 and study the
  credit card statement (next two slides). Then
  Part 2s Questions for Discussion A through G
  will appear on that statement.

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RALPHS PRETTY GOOD DEPARTMENT STORE RALPHS PRETTY GOOD DEPARTMENT STORE RALPHS PRETTY GOOD DEPARTMENT STORE RALPHS PRETTY GOOD DEPARTMENT STORE
JOAN BERELLI1616 ELM STREETMIDDLETON, MA 02568YOUR LINE OF CREDIT ISYOUR AVAILABLE CREDIT IS 1000 638 AMOUNT DUE THIS STATEMENT NEW BALANCE 18.00 372.21
Mo. Day Reference TRANSACTION DESCRIPTIONFINANCE CHARGE ON AVERAGEDAILY BALANCE OF 363.52 IS CHARGES5.64 PAYMENTS CREDITS
0303 2429 95450032 PAYMENTWOMENS WEAR 29SWEATER 43 38.76 18.00
ON AVERAGEDAILY BALANCE OF MONTHLYPERIODIC RATE ANNUALPERCENTAGERATE
.01 TO 33 MIN. FINANCE CHARGE .50 MIN. FINANCE CHARGE .50
FINANCE CHARGERATE(S) FINANCE CHARGERATE(S) 33.01 TO 500.00500.01 AND ABOVE 1.51.25 1815
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RALPHS PRETTY GOOD DEPARTMENT STORE (statement continued)
use ACCOUNT NO.on correspondenceK 7605 3821 F BILLINGDATEAPR 12 2005 PREVIOUSBALANCE345.81 NEW BALANCE372.21 MINIMUM PAYMENT18.00
To avoid a FINANCE CHARGE next month, pay the NEW BALANCE shown above within 30 days (28 days for February statements) from BILLING DATE. If you prefer to pay in installments pay the MINIMUM PAYMENT shown above, or more, within 30 days (28 days for February statements) form BILLING DATE. The sooner you pay and the more you pay, the smaller your FINANCE CHARGE. To avoid a FINANCE CHARGE next month, pay the NEW BALANCE shown above within 30 days (28 days for February statements) from BILLING DATE. If you prefer to pay in installments pay the MINIMUM PAYMENT shown above, or more, within 30 days (28 days for February statements) form BILLING DATE. The sooner you pay and the more you pay, the smaller your FINANCE CHARGE. To avoid a FINANCE CHARGE next month, pay the NEW BALANCE shown above within 30 days (28 days for February statements) from BILLING DATE. If you prefer to pay in installments pay the MINIMUM PAYMENT shown above, or more, within 30 days (28 days for February statements) form BILLING DATE. The sooner you pay and the more you pay, the smaller your FINANCE CHARGE. To avoid a FINANCE CHARGE next month, pay the NEW BALANCE shown above within 30 days (28 days for February statements) from BILLING DATE. If you prefer to pay in installments pay the MINIMUM PAYMENT shown above, or more, within 30 days (28 days for February statements) form BILLING DATE. The sooner you pay and the more you pay, the smaller your FINANCE CHARGE. To avoid a FINANCE CHARGE next month, pay the NEW BALANCE shown above within 30 days (28 days for February statements) from BILLING DATE. If you prefer to pay in installments pay the MINIMUM PAYMENT shown above, or more, within 30 days (28 days for February statements) form BILLING DATE. The sooner you pay and the more you pay, the smaller your FINANCE CHARGE.
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RALPHS PRETTY GOOD DEPARTMENT STORE RALPHS PRETTY GOOD DEPARTMENT STORE RALPHS PRETTY GOOD DEPARTMENT STORE RALPHS PRETTY GOOD DEPARTMENT STORE
JOAN BERELLI1616 ELM STREETMIDDLETON, MA 02568YOUR LINE OF CREDIT ISYOUR AVAILABLE CREDIT IS 1000 638 AMOUNT DUE THIS STATEMENT NEW BALANCE 18.00 372.21
A. What is the finance charge for the current
billing period?
Mo. Day Reference TRANSACTION DESCRIPTIONFINANCE CHARGE ON AVERAGEDAILY BALANCE OF 363.52 IS CHARGES5.64 PAYMENTS CREDITS
0303 2429 95450032 PAYMENTWOMENS WEAR 29SWEATER 43 38.76 18.00
ON AVERAGEDAILY BALANCE OF MONTHLYPERIODIC RATE ANNUALPERCENTAGERATE
.01 TO 33 MIN. FINANCE CHARGE .50 MIN. FINANCE CHARGE .50
FINANCE CHARGERATE(S) FINANCE CHARGERATE(S) 33.01 TO 500.00500.01 AND ABOVE 1.51.25 1815
12
RALPHS PRETTY GOOD DEPARTMENT STORE RALPHS PRETTY GOOD DEPARTMENT STORE RALPHS PRETTY GOOD DEPARTMENT STORE RALPHS PRETTY GOOD DEPARTMENT STORE
JOAN BERELLI1616 ELM STREETMIDDLETON, MA 02568YOUR LINE OF CREDIT ISYOUR AVAILABLE CREDIT IS 1000 638 AMOUNT DUE THIS STATEMENT NEW BALANCE 18.00 372.21
B. What is the annual percentage rate if the
unpaid balance is over 500? Less than 500?
Mo. Day Reference TRANSACTION DESCRIPTIONFINANCE CHARGE ON AVERAGEDAILY BALANCE OF 363.52 IS CHARGES5.64 PAYMENTS CREDITS
0303 2429 95450032 PAYMENTWOMENS WEAR 29SWEATER 43 38.76 18.00
ON AVERAGEDAILY BALANCE OF MONTHLYPERIODIC RATE ANNUALPERCENTAGERATE
.01 TO 33 MIN. FINANCE CHARGE .50 MIN. FINANCE CHARGE .50
FINANCE CHARGERATE(S) FINANCE CHARGERATE(S) 33.01 TO 500.00500.01 AND ABOVE 1.51.25 1815
13
RALPHS PRETTY GOOD DEPARTMENT STORE RALPHS PRETTY GOOD DEPARTMENT STORE RALPHS PRETTY GOOD DEPARTMENT STORE RALPHS PRETTY GOOD DEPARTMENT STORE
JOAN BERELLI1616 ELM STREETMIDDLETON, MA 02568YOUR LINE OF CREDIT ISYOUR AVAILABLE CREDIT IS 1000 638 AMOUNT DUE THIS STATEMENT NEW BALANCE 18.00 372.21
C. What is the minimum payment due?
Mo. Day Reference TRANSACTION DESCRIPTIONFINANCE CHARGE ON AVERAGEDAILY BALANCE OF 363.52 IS CHARGES5.64 PAYMENTS CREDITS
0303 2429 95450032 PAYMENTWOMENS WEAR 29SWEATER 43 38.76 18.00
ON AVERAGEDAILY BALANCE OF MONTHLYPERIODIC RATE ANNUALPERCENTAGERATE
.01 TO 33 MIN. FINANCE CHARGE .50 MIN. FINANCE CHARGE .50
FINANCE CHARGERATE(S) FINANCE CHARGERATE(S) 33.01 TO 500.00500.01 AND ABOVE 1.51.25 1815
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D. What is the total amount charged for purchases
made during the previous month?
RALPHS PRETTY GOOD DEPARTMENT STORE RALPHS PRETTY GOOD DEPARTMENT STORE RALPHS PRETTY GOOD DEPARTMENT STORE RALPHS PRETTY GOOD DEPARTMENT STORE
JOAN BERELLI1616 ELM STREETMIDDLETON, MA 02568YOUR LINE OF CREDIT ISYOUR AVAILABLE CREDIT IS 1000 638 AMOUNT DUE THIS STATEMENT NEW BALANCE 18.00 372.21
Mo. Day Reference TRANSACTION DESCRIPTIONFINANCE CHARGE ON AVERAGEDAILY BALANCE OF 363.52 IS CHARGES5.64 PAYMENTS CREDITS
0303 2429 95450032 PAYMENTWOMENS WEAR 29SWEATER 43 38.76 18.00
ON AVERAGEDAILY BALANCE OF MONTHLYPERIODIC RATE ANNUALPERCENTAGERATE
.01 TO 33 MIN. FINANCE CHARGE .50 MIN. FINANCE CHARGE .50
FINANCE CHARGERATE(S) FINANCE CHARGERATE(S) 33.01 TO 500.00500.01 AND ABOVE 1.51.25 1815
15
RALPHS PRETTY GOOD DEPARTMENT STORE RALPHS PRETTY GOOD DEPARTMENT STORE RALPHS PRETTY GOOD DEPARTMENT STORE RALPHS PRETTY GOOD DEPARTMENT STORE
JOAN BERELLI1616 ELM STREETMIDDLETON, MA 02568YOUR LINE OF CREDIT ISYOUR AVAILABLE CREDIT IS 1000 638 AMOUNT DUE THIS STATEMENT NEW BALANCE 18.00 372.21
E. How much credit does Joan Berelli still have
available?
Mo. Day Reference TRANSACTION DESCRIPTIONFINANCE CHARGE ON AVERAGEDAILY BALANCE OF 363.52 IS CHARGES5.64 PAYMENTS CREDITS
0303 2429 95450032 PAYMENTWOMENS WEAR 29SWEATER 43 38.76 18.00
ON AVERAGEDAILY BALANCE OF MONTHLYPERIODIC RATE ANNUALPERCENTAGERATE
.01 TO 33 MIN. FINANCE CHARGE .50 MIN. FINANCE CHARGE .50
FINANCE CHARGERATE(S) FINANCE CHARGERATE(S) 33.01 TO 500.00500.01 AND ABOVE 1.51.25 1815
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RALPHS PRETTY GOOD DEPARTMENT STORE RALPHS PRETTY GOOD DEPARTMENT STORE RALPHS PRETTY GOOD DEPARTMENT STORE RALPHS PRETTY GOOD DEPARTMENT STORE
JOAN BERELLI1616 ELM STREETMIDDLETON, MA 02568YOUR LINE OF CREDIT ISYOUR AVAILABLE CREDIT IS 1000 638 AMOUNT DUE THIS STATEMENT NEW BALANCE 18.00 372.21
F. What is the new balance?
Mo. Day Reference TRANSACTION DESCRIPTIONFINANCE CHARGE ON AVERAGEDAILY BALANCE OF 363.52 IS CHARGES5.64 PAYMENTS CREDITS
0303 2429 95450032 PAYMENTWOMENS WEAR 29SWEATER 43 38.76 18.00
ON AVERAGEDAILY BALANCE OF MONTHLYPERIODIC RATE ANNUALPERCENTAGERATE
.01 TO 33 MIN. FINANCE CHARGE .50 MIN. FINANCE CHARGE .50
FINANCE CHARGERATE(S) FINANCE CHARGERATE(S) 33.01 TO 500.00500.01 AND ABOVE 1.51.25 1815
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RALPHS PRETTY GOOD DEPARTMENT STORE RALPHS PRETTY GOOD DEPARTMENT STORE RALPHS PRETTY GOOD DEPARTMENT STORE RALPHS PRETTY GOOD DEPARTMENT STORE
JOAN BERELLI1616 ELM STREETMIDDLETON, MA 02568YOUR LINE OF CREDIT ISYOUR AVAILABLE CREDIT IS 1000 638 AMOUNT DUE THIS STATEMENT NEW BALANCE 18.00 372.21
G. How is the new balance determined?
Mo. Day Reference TRANSACTION DESCRIPTIONFINANCE CHARGE ON AVERAGEDAILY BALANCE OF 363.52 IS CHARGES5.64 PAYMENTS CREDITS
0303 2429 95450032 PAYMENTWOMENS WEAR 29SWEATER 43 38.76 18.00
ON AVERAGEDAILY BALANCE OF MONTHLYPERIODIC RATE ANNUALPERCENTAGERATE
.01 TO 33 MIN. FINANCE CHARGE .50 MIN. FINANCE CHARGE .50
FINANCE CHARGERATE(S) FINANCE CHARGERATE(S) 33.01 TO 500.00500.01 AND ABOVE 1.51.25 1815
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Conclusion Knowing how to read a credit card
statement is a useful skill in managing credit.

• You get the advantage of buy now, pay later
• To make good decisions, its important to know
  how much credit costs you