Practice Consumer Law

Credit

Find the equivalents of the following words and expressions in the text.

Брать взаймы; давать в долг; должник; стоимость всех элементов кредита; проценты на капитал; необеспеченный кредит; закладывать собственность; получить кредит; кредит под залог имущества; гарантия, поручительство; отказ выпла- чивать долги; изымать за неплатеж; фактическая стоимость кредита, выраженная в форме процентной ставки; ростовщи- чество; сильно различаться; плавающая процентная ставка; базисная ставка; штраф.

Answer the questions:

1.What is credit?

2.Who are creditors and debtors?

3.Do debtors usually pay creditors additional money over the amount borrowed for the privilege of using the credit? What is this additional money owed to the creditor is called? What is it based on?

4.What are the two general types of credit? What is the difference between them?

5.What is a collateral?

6.What can the lender do if a borrower defaults?

7.What is usury? What happens to lenders who charge interest rates above the legal maximum?

8.Why can interest rates vary widely?

9.What do you know about variable interest rates?

10.What other charges besides the interest paid on a credit sale, may be added onto the basic price?

11.Have you ever obtained a credit?

Match the words on the left with the correct definition on the right:

Credit	additional money owed to the creditor.
Creditors	credit extended in exchange for a promise to
	repay in the future.
Debtors	credit for which the consumer must put up
	some property of value.
Finance charge	to default on the loan.
	91

Practice in Consumer Law

Unsecured credit			people who lend money or provide credit.
Secured credit			charging any amount above the legal limit.
Collateral			people who borrow money or buy on credit.
Not to	make	the	Insures the purchased item against theft or
required payments			damage.
Usury			some property of value as protection in the
			event the debt is not repaid.
Credit			buying goods or services now in exchange
life/disability		in-	for a promise to pay in the future or borrow-
surance			ing money now in exchange for a promise to
			repay it in the future.
Credit	property		covers the seller’s inconvenience in case of
insurance			late payments. May include court costs, re-
			possession expenses, and attorney’s fees.
Service charge			guarantees payment of the balance due if the
			buyer should die or become disabled during
			the term of the contract.
Penalty charge			covers the seller’s cost of bookkeeping, bill-
			ing, and so on

Problem–solving:

a.Make a list of products or services that you, friends, or family members have bought on credit.

b.What are the advantages and disadvantages of using credit to pay for college or vocational school tuition? For a car to get you to work? For a vacation? For clothing to be worn at a formal party?

d.Write some rules that will help you decide when to use

credit.

e.Joy tells Linda, “This washing machine is a good buy– only $500. Now, if you don’t have the cash, I can arrange easy credit for you. Only $50 down and – $50 a month for 12 months. Just sign here.” Linda signs and pays $50. How much interest will she pay if the g contract calls for 12 monthly payments of $50 each?

92

Credit Cards and Charge Accounts

UNIT 21.

Credit Cards and Charge Accounts

Read and translate the text.

Today, many stores and companies (including banks) issue credit cards and allow their customers to maintain charge accounts. Consumers can use credit cards to buy gasoline, take a vacation, go out to dinner, and buy furniture, clothing, and many other things. Some of these cards can also be used to obtain cash advances from banks and bank machines.

Credit cards are engraved with the holder’s name and identification number. They entitle the holder to buy goods or services on credit. Some companies provide these cards free; some charge a yearly fee, typically between $15 and $75. Consumers are usually given a credit limit and can make purchases up to that limit.

Companies issuing credit cards send out monthly statements indicating how much you owe. Most credit card and charge accounts allow you to pay bills over time, making a minimum monthly payment. You then pay interest on the unpaid amount of the bill. Often, if you pay the entire amount on or before the due date indicated on the bill, there is no extra charge. However, some companies impose interest charges from the date of the transaction. A few require full payment of money owed each month.

Companies use slightly different methods to compute interest. However, you can estimate the monthly interest charge by multiplying the balance owed by the monthly rate. For example, if the interest rate is 1,5%, you will multiply by .015. Suppose you owe a balance of $500.00. The monthly interest charge will be about $7.50 ($500.00 x .015), and the total amount owed for the month will be approximately $507.50 ($500.00 + $7,50 interest).

To more easily compare the rates charged by different companies, you can ask what annual percentage rate (APR) is charged. This rate is calculated the same way by all lenders. The APR is the percentage cost of credit on a yearly basis.

93

Practice in Consumer Law

When deciding which credit cards or charge accounts to maintain, you should find out the annual fee, if any; the annual percentage rate charged on money owed; and whether interest is charged from the date of the transaction or only on balances unpaid at the end of the billing period. Providers of credit compete with each other to get new customers. Some offer credit without a fee or very low interest for a certain period of time. Annual interest rates may vary by as much as 10 percentage points. It pays to shop around for credit.

Credit cards are in such wide use today that certain goods and services may be difficult to obtain without one. For example, some car rental companies will not rent to people without a major credit card.

While credit cards are an important convenience for many consumers, others use their cards to obtain “instant loans.” They regularly purchase goods and services with credit cards. Then, at the end of the month, they cannot pay the balance. The interest rate on unpaid credit card balances is almost always higher than the interest on a bank loan, so this is not a smart way to take out a loan.

If your credit card is lost or stolen, you should report it immediately to the credit card company. For protection, any person with credit cards should keep a list of the following information for each card: (1) the name of the company issuing the card, (2) the account number on the card, and (3) the number to call if the card is lost or stolen.

Many major credit card companies have toll–free 800 telephone numbers. Services offered by the companies differ, but generally you can notify them of a stolen or lost credit card, make inquiries about your bill or your account, apply for a credit card, and register a change of address.

If your credit card is lost or stolen, you are not responsible for any unauthorized charges made after you have notified the issuer that the card is missing. The law limits your liability for charges made before notification to $50 per card. If your card was not used but the thief obtained your credit card number and made unauthorized charges, you are not responsible for any of the charges.

94

Credit Cards and Charge Accounts

Find the equivalents of the following words and expressions in the text.

Расходный счет; кредит в наличной денежной форме; идентификационный номер; взимать ежегодную плату; кре- дитный лимит; давать право; ежемесячный расчет; срок пла- тежа; полная сумма; дополнительные выплаты; назначать процентные выплаты с даты сделки; высчитывать; бороться друг с другом за новых клиентов; подбирать подходящий кредит; широко использоваться; удобство; немедленно сооб- щить в компанию, выпустившую кредитную карту; бесплат- ный телефонный номер; уведомить; навести справки; несанк- ционированные выплаты; ограничивать ответственность.

Answer the questions:

1.How can you use credit cards?

2.What are credit cards engraved with?

3.What do they entitle the holder to do?

4.Are consumers usually given a credit limit? What does it mean?

5.How is interest usually paid? How is it computed?

6.When deciding which credit cards or charge accounts to maintain what should you find out?

7.Why does it pay to shop around for credit?

8.Are credit cards in wide use in Russia today? Do you have a credit card?

9.Why is it not a smart way to use credit cards to obtain “instant loans”?

10.What should you do if your credit card is lost or stolen?

Match the words on the left with the correct definition on the right:

Entitle	whole.
Entire	keep in existence.
Maintain	calculate.
Vacation	give the right.
Compute	establish as something to be obeyed or complied
	with.
cash advance	holiday.
Impose	inform.
Notify	loan of money.
	95

Practice in Consumer Law

Problem–solving:

The Lost Credit Cards

Sally lost her wallet, which contained credit cards from a bank and a retail store. By the time Sally realized her wallet was missing, someone had charged $800 on the bank card and $100 on the store account. Does Sally have to pay these bills?

Problem–solving:

Choose an item you would like to have but could purchase only by using credit.

a.Where could you shop for this credit?

b.What is the APR for each creditor? What other finance charges are required?

96

EFT Cards and Debit Cards

UNIT 22.

EFT Cards and Debit Cards

Read and translate the text.

In recent years, many banks have offered their customers electronic funds transfer (EFT) cards. These engraved plastic cards look like credit cards but are not credit cards. Instead, they allow you to withdraw money from your account by using an automatic teller machine.

If your EFT card is lost or stolen and you do not notify your bank within two business days after discovering its loss, you may be liable for up to $500 in unauthorized withdrawals. If you notify the bank within two business days, your loss is limited to $50.

Some businesses (such as gas stations and grocery stores) are now issuing debit cards to their customers. These cards look like credit cards but work like EFT cards. For example, when a consumer purchases gasoline using a debit card, the amount of the purchase is transferred immediately from his or her account to the gas station’s bank account.

Billing Errors. Billing errors can be a real headache. It takes time and energy to sort them out, and they can cost you money if you don’t discover them. To avoid billing problems, check all sales slips carefully, save receipts and canceled checks, and go over each bill or monthly statement carefully.

If you still encounter a problem, the Fair Credit Billing Act provides you with a measure of protection. If you complain in writing about your bill, this law requires creditors to acknowledge and respond to your complaint within 90 days. You may withhold payment of the disputed amount pending the investigation; however, undisputed amounts must be paid as normally required. Until your complaint is settled, the law forbids the creditor from reporting the matter to a credit bureau.

If it is determined that the bill is correct, you may have to pay a finance charge on the unpaid amount in dispute. However, a

97

Practice in Consumer Law

creditor who does not follow the requirements of the law may not collect the first $50 of the disputed amount, even if the bill turns out to be accurate. A consumer can sue such a creditor for damages and can also recover attorney’s fees.

If you are to receive the protection of the Fair Credit Billing Act, your communication to the creditor must meet certain requirements. As noted, you must complain in writing. Phone calls do not protect your rights under this act. Your notice must be received at the creditor’s address for billing error inquiries within 60 days after the statement was first sent to you. In the notice, you must include your name, complete address, and account number. Finally, you must explain why you believe there is a billing error and state the amount of the error.

It is important to follow these requirements when complaining about a bill. Once negative information is reported to a credit bureau, it may be difficult to have it removed.

Find the equivalents of the following words and expressions in the text.

Банковский автомат; платежная карточка; карточка электронных платежей; ошибки при выписке счетов; квитан- ция; сталкиваться с проблемой; отреагировать на жалобу; в течение расследования; счет оказывается точным; подавать жалобу в письменном виде.

Answer the questions:

1.What steps should you take if your EFT card is lost or stolen?

2.What are the advantages and disadvantages of using a debit card to pay for purchases?

3.What happens if your EFT card is lost or stolen and you do not notify your bank within two business days after discovering its loss?

4.What are debit cards? How do they work?

5.How can you avoid billing problems?

6.How must you complain about billing errors?

7.Do you have a debit card?

98

EFT Cards and Debit Cards

Match the words on the left with the correct definition on the right:

Electronic funds transfer cards	receipt.
Sort out	without error.
Sales slip	EFT.
Pending	during.
Accurate	understand and interpret.

99

Practice in Consumer Law

UNIT 23.

Costly Credit Arrangements

Read and translate the text.

Consumers may fall prey to loan sharking. Loan sharks lend money at high, often usurious (illegal) rates of interest. They promise “easy” credit and appeal to people who have problems obtaining and keeping good credit standing.

Usurious loans are illegal under state laws. There are, however, a variety of legal but costly credit arrangements that consumers may want to avoid.

Some creditors call for balloon payments in their agreements. In such agreements, the last payment is much larger than the monthly payments. This may make it difficult for you to make the final payment. Consumers should carefully consider any agreement that calls for a large final payment. Be sure you can save up enough to make this payment.

Another thing to avoid in financing agreements is the acceleration clause. This clause permits the creditor to accelerate the loan, making all future payments due immediately in the event a consumer misses a single payment. Most auto sales finance agreements have acceleration clauses. If you miss a payment, you may suddenly owe the creditor the entire amount of the loan. Many cars are repossessed by lenders for this reason.

You should also beware of bill consolidation. This means combining all your debts into a single one. Lenders sometimes claim you can wipe out all your bills by making easy monthly payment to them, which they will distribute to your creditors. However, the consolidation loan may require payments over a longer period of time and at a higher rate of interest. Some lenders also charge a substantial fee for these loans. They may subtract the fee from your monthly payment to them before paying off your creditors, so you wind up falling deeper in debt.

100