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?

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

5. 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?

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.

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.

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

Расходный счет; кредит в наличной денежной форме; идентификационный номер; взимать ежегодную плату; кредитный лимит; давать право; ежемесячный расчет; срок платежа; 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 сообщить в компанию, выпустившую кредитную карту; бесплатный телефонный номер; уведомить; навести справки; несанкционированные 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.

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?