1. What type of credit user is Garth? Based on your answer, what is the number one factor that should influence Garth's choice of a credit card?
2. Lindsey insisted that Garth request a free credit report. List and briefly explain the information that Lindsey will need to help Garth decipher his report.
3. Nathaniel, another friend, suggested that Garth should obtain a secured credit card or, better yet, a Titanium card. Do you agree? Why or why not?
4. Based on what you know about Garth, what kind of additional fees and penalties is he most likely to encounter? What is the impact of these fees and penalties on Garth?
5. Explain the differences in credit card interest rates described as fixed, variable, teaser, and penalty rates. How do these different rates affect the cost of using a credit card?
6. What factors should Garth consider if he decides to transfer his current card balance to another card?
7. Much to Garth's surprise, his last credit card application was rejected. What actions, if any, should he take? Why should he be concerned about this rejection if he still has his other cards?
8. Use Table 6.5 to determine how many months Garth will need to pay off a $3,000 outstanding balance if he pays $150 per month with an APR of 15 percent and he does not make any additional purchases. Tell Garth how much his monthly payment needs to be in order to eliminate his debt in 11 months, assuming no additional purchases.
9. After Lindsey's crash course on credit education, Garth decided to discipline himself by closing a couple of his older accounts. Is this a good strategy?
10. What advice would you give Garth if he has trouble paying his credit card bill in the future?
Garth was amazed to hear that his friend Lindsey always pays off her credit card balance each month. Garth just assumed that everyone used credit cards the same way—buy now, pay later—only in his case, months later. He buys almost everything he needs or wants, including clothes, food, and entertainment, with his card. When Lindsey asked him about the balance calculation method, APR, grace period, and other fees and features of his card, Garth was clueless. He reasoned that his credit card was a safe and convenient way to shop and that it allowed him to buy expensive items by paying minimum monthly payments. Overall, Garth thought of himself as a responsible credit user, despite the fact that he had been late making a few monthly payments and, once or twice, had gone over his credit limit. He also uses his card regularly to obtain cash advances. After hearing all of this, Lindsey is worried about her friend. She has come to you for help in answering the following questions.