Intro to Credit

Learning Targets! Define credit Comprehend Interest Fees Basic understanding of credit debt Analyze a Credit Statement

Survey on Credit Take 3 minutes and fill out your survey

Speed Dating Time! You know the drill, set up your lines. Bring your survey with you and stand across from another person in two parallel lines

What is a credit card? Dale: "A credit card is a card that doesn't hold money, but every time you use it puts like a list of stuff and then they take the money out of the bank.“ Why do people use credit? Dora: "You can have a lot more money on it than fits in all your purses." How do you get a credit card? Jamie: "You get it from your Mom and Dad Who can’t get credit? Casey: "Babies, poor people and hobos, or anybody that has been like in prison or you're a felony person or something." How do you know if you need a credit card? Troy: "When you're getting bored walking around with hundreds of dollars in your pockets

So What is Credit? Credit is the supplying of money, goods, or services at present, in exchange for the promise of future payment. It is the concept of borrowing money from a bank and paying it back monthly… what else does this sound like that we talked about in our budgets?! …For your automobile…

Advantages/Disadvantages of Credit Advantages Temporary expansion of income Financial Responsibility (build credit) Convenience Cash theft protection Rewards Can help you get a loan Disadvantages Interest and fees Juggling too many cards at once Destroy credit, much harder to get a loan in the future Impulse buying Overspending

Terms to Define Creditor/Lender: The business or organization that extends the credit – Examples: an individual, a credit card issuer, a bank, or even a corporation Principle: The original amount of money borrowed Interest: A percentage rate applied to borrowed money – The principal way in which card issuers generate revenue – charging the cardholder interest over the time the money remains borrowed

Interest Terms Fixed Rate: Interest rate that stays the same Adjustable/Variable Rate: Interest rate that can change Security Interest/Collateral: Security interest on certain securities/assets which can be repossessed in the event that timely obligation payments are not met. – created by agreement or by operation of law over assets

Interest Example  Say you racked up $2,500 on your credit card! But wait, you can’t afford that!?  Don’t worry, the credit company is so nice they only make you pay $250 of it each month …..But with a 18% interest rate…  If you only make the minimum payment every month on the card, it will take you 17 years (your whole life so far!) to pay it off at a total cost of $5, Of course, that’s only true if you also cut up the card and never use it again!

Credit Debt Don’t get tricked into zero % interest rates and “great deals”! There’s almost ALWAYS a catch in the fine print. Try not to open multiple credit cards with stores (Costco, Macy’s, Target, etc.) because you will be juggling multiple cards, payments, interest rates, etc., they plan for you to mess up!  Just because you pay off your debt, does not mean your credit history is wiped clean instantly. ***Here’s the world’s biggest secret for staying out of debt…. You excited to find out??....

_tutor/index.html With a partner or alone, analyze the credit statement given to you and answer the worksheet. -Everyone fill out their own worksheet please! Analyzing a Credit Statement

Parts of a Credit Card credit-card-1267.php Why is the CVV (Card Verification Value) important? What else can we put on the signature line besides a signature?

How’d We Do?! Define credit Comprehend Interest Fees Basic understanding of credit debt Analyze a Credit Statement