Using Credit Cards: The Role of Open Credit - IPB · PDF fileUsing Credit Cards: The Role of...

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Using Credit Cards:

The Role of Open Credit


Definitions and Examples of

Credit

Credit -- receiving cash, goods, or services

with an obligation to pay later.

– Examples -- auto loans or personal loans

Open credit -- credit that you can use and

repay at your pace so long as you pay the

required minimum monthly payment.

– Examples -- Credit cards or department store

credit cards


6 - 3

Why People Use Credit

For Convenience

For Emergencies

For Identification

To Make Reservations

To Consume Expensive Products Sooner

To Enjoy the Good Life

To Take Advantage of Free Credit

To Consolidate Debts

To Obtain an Education


Credit Card Statements

Billing Date- (Sometimes called the Closing Date or Statement Date) is the last date of the month for which any transactions are reported; this is generally the same date each month

Due Date- Date, specified by credit card company, of when they should receive payment

– The period between the billing date and due date is usually about 20-25 days

– Watch the fine print! (Example: time of payment)


Determining the Costs of

Open Credit

The balance owed

Interest rates

Balance calculation method

Cash advance costs

The grace period

The annual fee

Additional or penalty fees


Interest Rates

Annual percentage rate (APR) – the

cost of credit on a yearly basis as a

percentage rate

Teaser rates – introductory rates used

to attract new customers, some as low

as 2.9%

Most credit cards compound interest


Balance Calculation Methods

Average daily balance,

most common

– Including new purchases

– Excluding new

purchases

– Two-cycle

Previous balance –

most expensive

Adjusted balance –

least expensive


Buying Money: The Cash

Advance

An extremely expensive way to borrow

Interest begins immediately and may be at a higher rate than for purchases

Usually there is a “cash advance fee” of 2% to 4% of the amount advanced

Some cards require payment of the purchase balance before payment of the cash advance balance


The Grace Period

Normally 20 to 25 days, excluding cash

advances

Doesn’t apply if you carry a balance

With no balance, you could avoid

paying for a purchase for nearly 2

months

Not all credit cards offer a grace period


The Annual Fee

Range from $0 to $100 (American Express charges $300 for their Platinum card.)

70%of the 25 biggest card issuers don’t charge an annual fee.

Merchant’s discount fee -- charged to merchants, typically 1.5% to 5.0% of the purchase amount


Additional Fees

Cash advance fee

Late fee

Over-the-limit fee

Penalty rates

Be alert--

“Important Notice of

Change of Terms”


Keterangan Citibank Gold Card Citibank Silver Card

Suku Bunga

a. Suku Bunga Pembelanjaan 3.5% per bulan / 42% per tahun

b. Suku Bunga Pengambilan Tunai 4% per bulan / 48% per tahun

Biaya Pengambilan TunaiDikenakan atas setiap transaksi Penarikan Tunai dengan

menggunakan Kartu Kredit Citibank

4% dari jumlah yang diambil atauminimum Rp. 50.000

4% dari jumlah yang diambil atauminimum Rp. 40.000

Biaya Keterlambatan Pembayaran Dikenakan bila pembayaran Anda diterima setelah lewat Tanggal

Jatuh Tempo, atau bila jumlah pembayaran kurang dari Pembayaran Minimum

6% dari jumlah Pembayaran Minimum yang tertunggak sampai

dengan 1 bulan sejak tanggal penagihan sebelumnya.

Minimum Rp. 75.000 dan maksimum Rp. 150.000

6% dari jumlah Pembayaran Minimum yang tertunggak sampai

dengan 1 bulan sejak tanggal penagihan sebelumnya.

Minimum Rp. 50.000 dan maksimum Rp. 100.000

Biaya Pemakaian di Luar Batas (Over Limit) Dikenakan bila penggunaan Kartu Kredit Citibank Anda melebihi

Batas KreditRp. 75.000 Rp. 50.000

Biaya Penggantian Kartu Dikenakan atas setiap penerbitan Kartu Kredit Citibank baru sebagai pengganti Kartu Kredit Citibank sebelumnya yang hilang atau rusak

dan telah dilaporkan kepada Citibank sesuai prosedur pelaporan kehilangan atau kerusakan Kartu Kredit Citibank

Rp. 50.000 per kartu

Biaya Pengembalian Cek/Giro Dikenakan bila Anda membayar tagihan Kartu Kredit Citibank dengan cek/giro yang harus diproses melalui kliring dan ternyata kemudian

cek/giro tersebut dikembalikan oleh Bank tertarik dengan alasan apapun

Rp. 25.000

Bea Materai Atas Lembar PenagihanBesarnya akan tergantung pada nilai pembayaran yang Anda lakukan

Sampai dengan Rp 250.000 Rp. 0

Di atas Rp 250.000 sampai dengan Rp 1 juta Rp. 3.000

Di atas Rp 1 juta Rp. 6.000

Biaya Sales Draft Dikenakan untuk setiap pemberian salinan atau fotokopi dari sales

draft sebagai bukti penggunaan Kartu Kredit Citibank atas permintaan Anda

Rp. 25.000

Biaya Cetak Ulang Lembar Penagihan Dikenakan untuk setiap permintaan pencetakan ulang Lembar

Penagihan yang sebelumnya telah dikirimkan oleh Citibank kepada Anda

Rp. 30.000

Contoh Kartu Citibank


The Pros of Credit Cards

Convenience or ease of shopping

Emergency use

Consume and use before the purchase

is fully paid for

Bill consolidation

Can be used in anticipation of price

increases


The Pros of Credit Cards (cont’d)

Interest-free credit

Make reservations

Use as identification

A source of free

benefits


The Cons of Credit Cards

It’s too easy to lose control of spending.

It’s, in general, an expensive way to

borrow money.

It’s an obligation of future income--you’ll

have less to spend in the future.


Choosing a Source of Open

Credit

Bank credit cards– Bank card variations

Travel and entertainment (T&E) cards

Single-purpose cards


Bank Credit Cards

Issued by banks, may charge annual

fees

Visa and MasterCard franchise credit

authorization systems

Offer a variety of benefits

May be “co-branded” or “rebate cards”


Bank Card Variations

Premium or prestige

cards

Affinity cards

Secured credit

cards


Other Sources of Open Credit

Travel and entertainment cards require full payment monthly.

Single-purpose cards may or may not offer revolving credit, but usually have no annual fee.

Traditional charge accounts offer convenience of payment and service before billing.


Know Your Credit Card

Philosophy

Credit user

– Low APR

Convenience user

– Low annual fee

– Long, interest-free grace period

– Free benefits

Convenience and credit user

– Balance interest rate and annual fee for the lowest

total cost


Getting a Credit Card: The

Five Cs of Credit

Character

Capacity

Capital

Collateral

Conditions


Character adalah data tentang kepribadian dari calon

pelanggan seperti sifat-sifat pribadi, kebiasaan-

kebiasaannya, cara hidup, keadaan dan latar belakang

keluarga maupun hobinya. willingness to pay.

Capacity merupakan kemampuan calon nasabah dalam

mengelola usahanya yang dapat dilihat dari pendidikannya,

pengalaman mengelola usaha (business record) nya,

sejarah perusahaan yang pernah dikelola (pernah

mengalami masa sulit apa tidak, bagaimana mengatasi

kesulitan) ability to pay

Capital adalah kondisi kekayaan yang dimiliki oleh

perusahaan yang dikelolanya. Hal ini bisa dilihat dari

neraca, laporan rugi-laba, struktur permodalan, ratio-ratio

keuntungan yang diperoleh


Collateral adalah jaminan yang mungkin bisa disita

apabila ternyata calon pelanggan benar-benar tidak

bisa memenuhi kewajibannya.

Condition, pembiayaan yang diberikan juga perlu

mempertimbangkan kondisi ekonomi yang dikaitkan

dengan prospek usaha calon nasabah. Ada suatu

usaha yang sangat tergantung dari kondisi

perekonomian, oleh karena itu perlu mengaitkan

kondisi ekonomi dengan usaha calon pelanggan.


Credit Evaluation: The Credit

Bureau

The credit bureau: collects and reports

information from creditors, public court

records, and the consumer.

Determining your creditworthiness --

credit scoring determines if you qualify

for credit and the interest rate offered.


Information on Your Credit

Report

Personal demographics

– age

– Social Security number

– addresses

Employment history

Credit history


Information on Your Credit

Report (cont’d)

Criminal convictions

and judgments

Previous two years

of inquiries


Factors That Determine

Creditworthiness

Annual income

Length of time at current residence

Length of time at current job

Type of residence

Age

Employment


Factors That Determine

Creditworthiness (cont’d)

Number of bank accounts

Number of credit cards

If you have a telephone

Credit history

Note: All the factors provide

information historically linked with

individuals that are good credit risks.


If Your Application Is Rejected

Apply for a card with

another institution

Find out WHY you

were rejected. Then,

take steps to correct

the problem.


Managing Your Credit Cards

and Open Credit

Reducing your balance

Protecting against fraud

Trouble signs in credit card spending

Controlling spending

If you can’t pay your credit card bills


Reducing Your Balance

Pay more than the

2% to 3% minimum

monthly payment

Find a card that

offers a lower

interest rate


Protecting Against Fraud

Save your credit card receipts.

Compare them to your statement.

Destroy old receipts.

Use caution when giving out your credit

card number.

Never leave a store without your card.


What to Do If You Can’t Pay

Your Credit Card Bills

“Act your wage!!”

Make sure you have the least

expensive credit card.

Consider using savings, if possible, to

pay off debts.

Consolidate your debts with a home

equity loan or secured personal loan.


Summary

Two types of open credit

– revolving credit lines and credit cards, including

bank, T&E, and single purpose cards

Factors that determine the cost of credit

– interest rate

– balance calculation method

– grace period

– annual fees

– other fees


Summary (cont’d)

Advantages of using

open credit

– source of interest-

free credit

– making reservations

– use as identification

– source of free

benefits

Disadvantages of

using open credit

– easy to lose control

of spending

– an expensive way to

borrow money

– you’ll have less

spendable income in

the future


Summary (cont’d)

The “five C’s” of creditworthiness

– character, capacity, capital, collateral, and conditions

National credit reporting bureaus

– Experian, Equifax, and Trans Union

Methods of calculating finance charges

– average daily balance, previous balance, and adjusted balance


Summary (cont’d)

Monitor credit report information

Control credit spending

Recognize and avoid credit trouble

Understand credit consumer protection

laws


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