In this chapter, you will learn to: Describe the reasons for using consumer credit and identify its benefits and problems; develop a plan to establish a strong credit history; distinguish among the different forms of open account credit; apply for, obtain, and manage open forms of credit; choose the right credit cards and recognize their advantages and disadvantages; avoid credit problems, protect yourself against credit card fraud, and understand the personal bankruptcy process. | PFIN 4 Using Credit 6 GITMAN/ JOEHNK/ BILLINGSLEY Copyright ©2016 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. 1 Describe the reasons for using consumer credit and identify its benefits and problems 2 Develop a plan to establish a strong credit history 3 Distinguish among the different forms of open account credit 4 Apply for, obtain, and manage open forms of credit LEARNING OUTCOMES PFI4 | CH6 Copyright ©2016 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. 5 Choose the right credit cards and recognize their advantages and disadvantages 6 Avoid credit problems, protect yourself against credit card fraud, and understand the personal bankruptcy process LEARNING OUTCOMES (continued) PFI4 | CH6 Copyright ©2016 Cengage Learning. All Rights Reserved. May not be scanned, copied or . | PFIN 4 Using Credit 6 GITMAN/ JOEHNK/ BILLINGSLEY Copyright ©2016 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. 1 Describe the reasons for using consumer credit and identify its benefits and problems 2 Develop a plan to establish a strong credit history 3 Distinguish among the different forms of open account credit 4 Apply for, obtain, and manage open forms of credit LEARNING OUTCOMES PFI4 | CH6 Copyright ©2016 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. 5 Choose the right credit cards and recognize their advantages and disadvantages 6 Avoid credit problems, protect yourself against credit card fraud, and understand the personal bankruptcy process LEARNING OUTCOMES (continued) PFI4 | CH6 Copyright ©2016 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. The Basic Concepts of Credit Why we use credit Avoid paying cash for large outlays Meet a financial emergency Convenience Investment purposes Improper uses of credit Meet basic living expenses Make impulse purchases Purchase non-durable goods PFI4 | CH6 Copyright ©2016 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Credit Crisis on Borrowers Households were unable to repay the mortgages Monthly consumer credit payments (excluding mortgage) should not exceed 20% of monthly net income Debt Safety Ratio = Monthly consumer credit payments Monthly take-home pay PFI4 | CH6 Copyright ©2016 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Establishing Credit Open checking and savings accounts Build a strong credit .
