Bab 2

Managing Your Personal Finances

5. Financial Services : Saving Plans and
Payment Accounts
A Strategy for Managing Cash
Financial product such as saving plans,cheking
accounts,loans,trust services,and electronic
banking are used for managing daily financial
activities. Technology,opportunity coats,and
economic conditions affect the selection and
use of financial services.
Type of Financial Institutions

Deposit-Type Nondeposit Institutions

Institutions
• Commercial banks • Life insurance
• Saving and loan companies
association • Investment companies
• Mutual saving banks • Finance companies
• Credit unions • Mortgage companies
• Pawnshops
• Check-cashing outlets
Types of Savings Plans Evaluating Saving Plans
Commonly used saving plans Factors used to evaluate different
-include regular savings accounts saving plans.
-sertificates of deposit Your selection of saving plan will be
-interest-earning checking accounts influenced by the
-money market accounts -rate of return
-money market funds -inflation
-U.S. Saving bonds -tax considerations
-liquidity
-safety
-restrictions
-fees
Selecting Payment Methods
Compare the costs and benefits of different types of checking
accounts.
Many of these payment
methods are the result
of technology and
the internet :
1.Electronik payment
2.Debit card transactions
3.Online payment
4.stored-value cards
5.Smart card
Types of checking account :
1.Regular checking accounts
2.Activity accounts
3.Interest-earning checking
accounts
4.Restrictions
5.Fees and charges
6.Interest
7.Special service
 6. Introduceyion to Consumer Credit
What is consumer credit ?
Define consumer credit: Consumen credit is the use
of credit by individuals and families for personal
needs.
- The importance of consumer credit in our
economy
- Uses and misuses of credit
- Adventages of credit
- Disadvantages of credit
Types of credit
Closeed-end credit: Open-end credit:
• Mortgage loans • Cards issued by
• Automobile loans departement
• Installment stores,bank
loans(installment sales cards(visa,mastercard,a
contract,installment merica express)
sales • Travel and
contract,installment entertainment(T&E)
cash credit,single lump- • Overdraft protection
sum credit)
Measuring your credit capacity
Two general rules for measuring credit capacity are
- Debt payment-to-income ratio
- Debt-to-equity ratio
In reviewing your creditwirthiness,a creditor seeks information from one of
the three national credit bureaus or a regional credit bureau.
Applying for credit
Describe the information creditors look for when you apply for credit.
Creditors determine creditworthiness on the basic of the five Cs:
1.Character
2.Capacity
3. Capital
4.Collateral
5.Conditions
Avoiding and correcting credit mistake

Identify the step you can take to avoid and

correct credit mistake.
Fair Credit Billing Act(FCBA) Sets procedures for
promptly correcting billing mistake,refusing to
make credit card payments on defective
goods,and promptly crediting payments.
Complaining about consumer credit
-Describe the laws that protect you if you have complaint
about consumer credit.
-If you have a complain about credit,first try to deal directly
with creditor. If that fails,you can turn to the appropriate
consumer credit law. These laws include the Truth in
Lending Act,the Consumer Leasing Act,the Equal Credit
Opportunity Act,the Fair Credit Billing Act,the Fair Credit
Reporting Act,and the Consumer Credit Reporting Reform
Act.
 7. Choosing a Source of Credit :
The Cost of Credit Alternatives
Sources of Consumer Credit
The major sources of consumer credit are comercial
banks,savings,and loan associations,credit union,finance
companies,life insurance companies,and family and friend.
Each of these sources has unique advantages and
disadvantages
The Cost of Credit
Determine the cost of credit by calculating interest using
various interest formulas.
Compare the finance charge and the annual percentage rate
(APR) as you shop for credit. Under the Truth in Lending
Law.creditors are required to state the cost of borrowing so
that you can compare credit cost and shop for credit.
Managing Your Debts
The fair Debt Collection Practices Act prohobits certain practices by
debt collection agencies. Debt has serious consequences if a proper
plan for managing it is not implemented.
-most people agree that emotional problems,the use of money to
punish,the expectation of instant comfort,etc.
Consumer Credit Counseling Services
Evaluate various private and govermental sources that assist
consumers with debt problems.
Such organizations help people manage their money better by setting
up a realistic budget and plan for expenditures. And help family budget
planning and providing education to people off all ages.
Declaring Personal Bankruptcy
Assess the choices in declaring personal
bankruptcy.