| Name: | | | | Date: | 3/12/13 |
| Chapter 8 |
| Building Your Own Financial Plan |
| Goals |
| 1. Establish a credit limit that will enable you to pay credit card balances in full each month. |
| 2. Select credit cards that will provide the most favorable terms at the lowest cost. |
| Analysis |
| 1. Referring to your personal cash flow statement, determine how much excess cash inflows |
| you have each month. Based on this amount, set a self-imposed credit limit each month so |
| that you can pay off your balance in full. If you have existing credit card debt, use the |
| template below to determine how many months it will take you to pay off your balance |
| at three different monthly payment amounts. (The Excel template will perform the |
| calculations for you.) Revise your cash flow statement based on your decisions. |
| | | Alternative 1 | Alternative 2 | Alternative 3 |
| Credit Card Debt |
| Monthly Payment |
| Interest Rate per Year |
| Months to Pay off Debt | | 0.00 | 0.00 | 0.00 |
| 2. Use the following template to select a credit card with favorable terms. |
| Rate the cards from "5" as the best in a category to "1" as the worst. |
| Bank Credit Card Scorecard |
| | | CREDIT CARD ISSUER |
| QUESTION | | 1 | 2 | 3 | 4 | 5 |
| 1. Annual fee |
| 2. Interest rate on purchases |
| 3. Interest rate on cash advances |
| 4. Transaction fee for cash advances |
| 5. Insurance on purchases |
| 6. Credit earned toward purchases at selected businesses |
| 7. Frequent flyer miles |
| 8. Free delivery on mail order purchases |
| 9. Phone card capability |
| 10. Credit limit available |
| TOTAL | | 0 | 0 | 0 | 0 | 0 |
| Decisions |
| 1. What is your self-imposed credit limit each month for future credit card purchases? How much of your cash |
| inflows do you need to allot each month to paying off any existing credit card debt? |
| 2. What credit cards offer the most favorable terms for your needs? |
lila_v
finance1_.xlsx
