第8章信用管理とその影響

レッスンの学習目標:

導入： Effective credit management involves understanding the various types of credit available,
how to compare credit costs, and recognizing the impact of credit decisions on personal finances. This chapter explores the intricacies of managing credit, including identifying incorrect billing statements, comparing credit costs, and the implications of using credit.

Identify Incorrect Billing Statements: Learn how to spot and contest inaccuracies in
billing statements to prevent overcharges and maintain accurate financial records.
Compare Credit Costs: Understand key factors such as APR, initial fees, late fees, and nonpayment fees to make informed decisions when choosing credit products.
Impact of Credit Decisions: Recognize how credit decisions affect personal finances,
including borrowing costs, credit scores, and future loan eligibility.

形： A business person interacting with a digital credit score rating system, showcasing the assessment of creditworthiness based on debt reports.

ソース：シャッターストック

Introduction to Credit Management

Effective credit management involves understanding the various types of credit available, how to compare credit costs, and recognizing the impact of credit decisions on personal finances. This chapter explores the intricacies of managing credit, including identifying incorrect billing statements, comparing credit costs, and the implications of using credit.

Identifying and Contesting Incorrect Billing Statements

Consumers must vigilantly review their billing statements for inaccuracies. When identifying an incorrect billing statement, consumers should first contact the billing company to attempt resolution. If unsatisfied, they can escalate the complaint to consumer-advocacy agencies such as the Better Business Bureau (BBB), Chamber of Commerce, Florida Department of Agriculture and Consumer Services, and the Federal Trade Commission (FTC). These organizations can offer mediation services and, if necessary, guidance on further legal action.

Comparing Credit Costs

の Annual Percentage Rate (APR) そして initial fees, late fees, and nonpayment fees are critical factors when comparing credit costs. The APR offers a comprehensive look at borrowing costs, including interest rates and other charges, allowing consumers to compare different credit sources effectively. For instance, credit card A might offer a lower APR but higher late payment fees compared to credit card B, affecting the overall cost of credit depending on the user’s habits.

Credit at Low Introductory Rates

Financial institutions may offer low introductory rates to attract new customers. While appealing, these rates can increase significantly after the introductory period, potentially leading to higher costs for consumers who are unable to pay off their balance before rates rise.

Secured vs. Unsecured Loans and credit cards

Secured loans require collateral and generally come with lower interest rates due to reduced lender risk, such as auto loans or mortgages, there is risk of losing the asset if payments are not made. In contrast, unsecured loans, like most credit cards, do not require collateral but have higher interest rates.

Secured credit cards require a cash deposit that serves as collateral, making them a lower-risk option for lenders and a valuable tool for consumers looking to build or rebuild their credit. Unsecured credit cards do not require a deposit but often depend on the consumer’s credit history for eligibility.

Factors Influencing Borrowing Costs

Down payments reduce the total amount financed, leading to lower monthly payments or shorter loan terms. Borrowers with substantial down payments pose less risk to lenders, often resulting in more favorable loan terms.

Credit Cards: Costs and Benefits

Credit cards offer convenience but can carry high interest rates and fees, especially for users with lower credit scores. While they enable immediate purchases, the long-term costs due to interest and fees can outweigh the benefits if not managed carefully.

Credit card grace periods, interest calculation methods, and associated fees directly affect the cost of borrowing. Grace periods allow borrowers to pay off their balance without incurring interest, providing a significant advantage if used wisely.

Consumer Protection Laws

Laws such as the Truth in Lending Act (TILA) そしてその Credit CARD Act ensure lenders provide clear disclosure of credit terms and protect consumers from unfair practices. Lending laws require lenders to provide full disclosure of credit terms, protecting consumers from discriminatory lending, abusive marketing, and unfair debt collection practices. Consumers should thoroughly review these disclosures when applying for credit to make informed decisions.

Preventing and Addressing Fraud

To protect against fraud, consumers should regularly monitor their accounts, use secure methods for online banking, and report any suspicious activity immediately. In cases of fraud, contacting the financial institution and relevant authorities promptly is crucial.

Free Annual Credit Reports

Credit reports, maintained by organizations like Equifax, Experian, and TransUnion, play a vital role in creditworthiness assessment. Factors affecting credit scores include payment history, credit utilization, and the length of credit history. Regularly checking credit reports and disputing inaccuracies are key to maintaining a healthy credit score.

Consumers are entitled to one free credit report annually from each of the major credit reporting agencies. Regularly checking credit reports helps identify errors that could affect borrowing costs and the ability to obtain credit.

Student Loans Comparison

Comparing different types of student loans, such as PLUS loans, private student loans, and direct subsidized or unsubsidized loans, is crucial in understanding long-term costs, including interest accrued during deferment periods.

Understanding the nuances of different student loans can significantly impact your education financing strategy. Here’s a breakdown of the interest accrual policies and eligibility criteria for various types of student loans:

Direct Subsidized Loans

Interest Accrual: The U.S. Department of Education pays the interest while the student is in school at least half-time, for the first six months after leaving school (grace period), and during deferment periods.
Eligibility: Available to undergraduate students with demonstrated financial need.

Direct Unsubsidized Loans

Interest Accrual: Interest accrues from the time the loan is disbursed to the student. Students are responsible for paying all the interest, although they can choose to defer interest payments while in school, which will then capitalize and be added to the principal amount of the loan.

Eligibility: Available to undergraduate, graduate, and professional students; there is no requirement to demonstrate financial need.

Parent Loan for Undergraduate Students (PLUS) Loans

Interest Accrual: Interest begins to accrue immediately upon disbursement. There is no subsidy available, and borrowers are responsible for all interest payments.

Eligibility: Available to the parents of dependent undergraduate students, as well as to graduate and professional students. Eligibility is not based on financial need, but a credit check is required. Borrowers with adverse credit history may need an endorser.

Private Student Loans

Interest Accrual: Interest begins to accrue immediately upon disbursement. There is no subsidy available, and borrowers are responsible for all interest payments.
Eligibility: Available to the parents of dependent undergraduate students, as well as to graduate and professional students. Eligibility is not based on financial need, but a credit check is required. Borrowers with adverse credit history may need an endorser.

Key Considerations:

- Interest Accrual and Capitalization: Understanding how interest accrues and when it capitalizes (is added to the principal balance of the loan) is crucial for managing the long-term cost of borrowing. Subsidized federal loans offer the benefit of not accruing interest while the student is in school, which can lead to significant savings.
- Eligibility Requirements: Federal loans generally require completing the Free Application for Federal Student Aid (FAFSA) to determine eligibility. Private loans will have their own application processes and may require proof of income, credit checks, and possibly a co-signer.
- Choosing the Right Loan: Consider the total cost of the loan, including both principal and interest, and any fees associated with borrowing. Federal loans offer benefits like fixed interest rates and access to income-driven repayment plans and forgiveness programs, which are not typically available with private loans.

Deferred Student Loan Payment

- Deferred payment of student loans, a feature that allows borrowers to postpone repayment under certain conditions such as financial hardship, enrollment in further education, or unemployment, can have both immediate relief and long-term financial implications. Here are the potential consequences of deferring student loan payments:
  
  Short-term Benefits
  - Immediate Financial Relief: Deferring payments can provide essential breathing room for individuals facing temporary financial difficulties, allowing them to allocate resources to immediate needs like housing, food, or medical expenses.
  - Avoidance of Default: By officially deferring loans, borrowers avoid defaulting on their loans, which helps maintain their credit score and avoids the severe penalties associated with loan default.
  Long-term Consequences
  - Accrual of Interest: For most types of student loans, interest continues to accrue during the deferment period, even if payments are not being made. This means that the total amount owed will increase, and borrowers will end up paying more over the life of the loan.
  - Extended Repayment Period: Deferring payments extends the time it will take to pay off the loan, potentially impacting borrowers’ long-term financial goals and delaying milestones such as buying a house or saving for retirement.
  - Increased Total Cost of Borrowing: The accumulated interest during the deferment period adds to the loan’s principal balance for unsubsidized loans, which can significantly increase the total amount repaid over the life of the loan.
  - Impact on Qualification for Forgiveness Programs: For borrowers working toward loan forgiveness through programs like Public Service Loan Forgiveness (PSLF), deferment periods may not count towards the qualifying payments, extending the time to forgiveness.
  Example Scenario
  Alex has $30,000 in federal student loans with an interest rate of 5%. He decides to defer his loans for one year due to financial hardship. During this year, his loans accrue interest of $1,500 (5% of $30,000), which is added to his principal balance if he has unsubsidized loans. When he resumes payments, his new balance is $31,500, and he will pay interest on this higher amount, increasing the cost of his loan.
  
  Strategies to Mitigate Negative Consequences
  - Interest Payments: If possible, making interest payments during deferment can prevent the interest from being capitalized (added to the principal balance), keeping the loan balance from growing.
  - Shorter Deferment Periods: Utilizing deferment only as long as necessary can help minimize the financial impact, as interest accrues over time.
  - Exploring Alternative Repayment Plans: Income-driven repayment plans may offer lower monthly payments without the need to defer and can lead to loan forgiveness after 20-25 years.
  Deferring student loan payments can be a helpful short-term strategy for managing financial hardship, but it’s essential for borrowers to consider the long-term implications on their overall financial health and to plan accordingly.

Credit Influence on Mortgage Rates and Payments

- Secured loans, like mortgages, typically have lower interest rates than unsecured loans. Mortgage payments are influenced by the loan amount, interest rate, and repayment period. Adjustable-rate mortgages (ARMs) may offer lower initial rates but can lead to higher future payments if interest rates rise. Fixed-rate mortgages offer stability with a constant interest rate. Comparing mortgage options based on the loan’s terms, amount, and interest rate is essential for finding the most affordable option.
  
  信用レポートとスコア
  Creditworthiness assessed through credit reports and scores significantly impacts borrowing costs. Landlords, employers, and insurance companies also use this information in their decision-making processes. Maintaining a positive credit history is crucial for financial health.

Alternative Financial Services

- Payday loans and similar services provide quick access to funds but at high costs. Understanding the implications of these services, including the cycle of debt they can cause, is vital for financial literacy.
  
  Payday Loans vs. Bank Loans
  The difference between a payday loan and a bank loan lies in the terms and costs. Payday loans typically have much higher interest rates and fees, leading to a greater repayment amount for the same borrowed sum compared to bank loans.
  Payday Loan Example:
  Let’s say John needs $500 for an emergency car repair. He turns to a payday lender, which offers him the $500 immediately. The terms require repayment in two weeks with a $75 service fee. If calculated as an annual percentage rate (APR), the interest on this loan would exceed 390%. If John cannot repay the loan in two weeks, he may need to take out another payday loan, incurring additional fees and potentially leading to a debt cycle.
  Bank Loan Example:
  In contrast, if Sarah needs $500 for a similar emergency, she might opt for a personal loan from a bank where she has an account. The bank offers her a loan with an APR of 10% (a high estimate for personal loans as of my last update in April 2023) with a one-year repayment term. Over the year, she would pay around $27.29 in interest, significantly less than the payday loan’s cost.
  Comparative Analysis:
  - Interest Rates and Fees: Payday loans have exceedingly high APRs compared to bank loans. The example illustrates a payday loan’s APR can be almost ten times higher than a high-rate personal bank loan.
  - Repayment Term: Payday loans typically have a very short repayment period (usually two weeks), whereas bank loans have longer terms, making monthly payments more manageable.
  - Cycle of Debt: Payday loans can lead to a cycle of debt due to their high costs and short repayment periods. Borrowers who can’t repay on time might take out additional loans, incurring more fees, which can trap them in a cycle of debt.
  - Impact on Credit: Regular bank loans can help build credit if repaid on time, thanks to reporting to credit bureaus. In contrast, payday loans do not usually build credit because they are not always reported to credit bureaus unless the loan goes into collections.
  This comparison shows that while payday loans may seem like a quick fix for financial emergencies, they often come at a much higher cost than traditional bank loans, which offer more manageable terms and lower interest rates. Borrowers should consider all alternatives and understand the terms and potential long-term implications before choosing a payday loan.

Barriers to Being Banked

Barriers to being banked, or reasons why individuals might not use traditional banking services, are multifaceted and can significantly impact financial health and access to financial opportunities. Here are the primary obstacles along with details on each:

Lack of Access to Banking Services

Geographical Barriers: In some areas, particularly in rural or underserved urban neighborhoods, there might be a scarcity of bank branches, making it difficult for residents to access banking services.
Digital Divide: The lack of internet access or digital literacy can prevent individuals from engaging with online banking services, which have become increasingly important for modern banking.

2. High Fees

Many unbanked individuals cite the high costs associated with maintaining a bank account, such as monthly maintenance fees, minimum balance requirements, and overdraft charges, as a significant deterrent.

Distrust in Financial Institutions

Historical practices of discrimination, along with well-publicized scandals involving major banks, have led to a distrust of these institutions among certain populations. This skepticism can discourage engagement with traditional banking.

Lack of Necessary Documentation

Opening a bank account typically requires government-issued identification, proof of address, and sometimes a social security number. Immigrants, young people, and others may lack these documents, barring them from banking services.

Privacy Concerns

Some individuals prefer not to share personal information required to open a bank account due to privacy concerns or fear of government scrutiny, especially among undocumented populations.

Informal Economy Participation

Individuals working in the informal economy may prefer to operate exclusively in cash to avoid taxation or because their income is inconsistent and unpredictable, making it harder to maintain a bank account.

Perceived Irrelevance

Some people do not see a personal benefit in having a bank account, either because they live paycheck to paycheck with no apparent need to save or invest, or they use alternative financial services like check-cashing or money orders to manage their finances.

Solutions and Efforts to Reduce Barriers

Financial institutions, governmental bodies, and non-profit organizations are working to reduce these barriers through various initiatives:

Low-Cost or No-Cost Banking Products: Offering basic bank accounts with no or low fees and no minimum balance requirements.
Financial Literacy and Education Programs: Helping individuals understand the benefits of banking and how to manage an account effectively.
Mobile and Internet Banking Solutions: Expanding access to banking services for individuals in underserved areas or with mobility issues.
Bank On Programs: Collaborations between cities, banks, and non-profits to create accessible banking products and increase financial inclusion.

By addressing these barriers, more individuals can be integrated into the formal financial system, providing them with opportunities for financial growth, stability, and participation in the broader economy.

Managing Credit and Debt

Maintaining a good credit history involves managing debt responsibly, making timely payments, and understanding the impact of credit inquiries. A strategic approach to credit use can improve and maintain a high credit score, benefiting the consumer’s financial future.

In summary, managing credit wisely requires an understanding of the terms and conditions of various credit products, recognizing the impact of borrowing decisions, and actively protecting one’s credit through informed management and dispute of inaccuracies.

主なレッスン情報:

閉会の辞: In summary, managing credit wisely requires an understanding of the terms and conditions of various credit products, recognizing the impact of borrowing decisions, and actively
protecting one’s credit through informed management and dispute of inaccuracies.

1. Identifying and Contesting Incorrect Billing Statements: Consumers must vigilantly
review their billing statements for inaccuracies. Contact the billing company to resolve errors,
and if necessary, escalate the complaint to consumer-advocacy agencies such as the Better Business Bureau (BBB) or the Federal Trade Commission (FTC).

2. Comparing Credit Costs: The Annual Percentage Rate (APR), along with initial fees, late
fees, and nonpayment fees, are critical factors when comparing credit costs. For example, a credit card with a lower APR but higher late payment fees may affect overall costs depending
on usage habits.

3. Secured vs. Unsecured Loans and Credit Cards: Secured loans, like auto loans, require collateral and usually offer lower interest rates. Unsecured loans, such as most credit cards, do not require collateral but come with higher interest rates. Understanding these differences helps consumers make informed borrowing decisions.

4. Consumer Protection Laws: Laws such as the Truth in Lending Act (TILA) and the Credit CARD Act ensure lenders provide clear disclosure of credit terms and protect consumers from unfair practices. Familiarize yourself with these protections to make informed credit decisions.