5.4 – Compare and contrast the purposes of credit and debit ROLL CALL QUESTION: SCHOOL APPROPRIATE PLANS FOR THE WEEKEND?

Mental Floss  Objective  5.4 – Compare and contrast the purposes of credit and debit  Vocab  Credit  Interest  APR  Credit card  Mortgage  Foreclosure  Credit score  Credit line  Financing  Debt  Questions:  1. Give an example of credit & a debit to your checking account.  2. What is interest in regard to a savings account?

Reminders  Test Next Friday  Budget Project Parts 1-5 due 11/12  No school 11/11  QUIZ on MONDAY  5.1 – Principles of Econ  5.2 – Budgeting  5.3 – Checking v. Savings  5.4 – Credit v. Debit  Insurance

Story Time!  Let’s read about credit  After we finish reading complete the questions on the bottom

II. Credit v. Debit  A. Credit : spending $ that you don’t have (borrowing)  1. Interest : Paying extra $ for borrowing

 a. Annual Percentage Rate (APR) : shows you how much your borrowing will cost you over a year.  (1). This can help you decide which credit card is best for you

B. Types of Credit  1. Credit Card : can borrow a certain amount of $ to spend  2. Student Loan  3. Car Loan  4. Mortgage (Home Loan)  a. Foreclosure : loosing your home because you do not pay your mortgage

Is Establishing Credit Necessary?  YES!!! In the 21 st century you need to establish credit if you want to do the following things…  Buy a Home  Buy a Car  Receive a good interest rate on a loan Having a good credit score shows lenders that you are reliable and will pay them back

C. Est. Good Credit  1. Credit Score : a number assigned to a person that lets lenders know your ability to pay back a loan

 2. To est. good credit you must start buying things using credit and pay that money back in a timely manner.  Helpful tips…  Have bills in your name  Always pay bills on time or earlier and try to pay more than the minimum payment  Keep a steady job  Don’t move often  Keep your debt low  Use your cards responsibly  Stick to a budget

 3. Credit Line : how much money is available for borrowing  4. Financing : borrowing money to pay for an item you will pay off over time  5. Debt : money that you owe someone (person/business/organization) else

Debit Card Pros You don’t to carry cash/checkbook It’s safe b/c only you know your PIN You are using the $ you actually have which can help with budgeting

Debit Card Cons You must have enough $ in your account to make purchases You have to remember your PIN to access cash If you don’t keep track of your purchases, you could overdraw and have to pay a fine

Credit Card Pros You can buy things before you have saved the entire purchase price It is a way to pay for emergency expenses Using it wisely and paying off on time can help you improve your credit score

Credit Card Cons You may have to pay a yearly fee for the card You pay interest on the unpaid monthly balance. B/c of interest, you may pay more for items than if you paid cash

Comparing Credit & Debit Card TypeProsCons Debit Card You don’t have to carry cash/checkbook It’s safe b/c only you know your PIN You are using the $ you actually have which can help with budgeting You must have enough $ in your account to make purchases You have to remember your PIN to access cash If you don’t keep track of your purchases, you could overdraw and have to pay a fine

Card TypeProsCons Credit Card You can buy things before you have saved the entire purchase price It is a way to pay for emergency expenses Using it wisely and paying off on time can help you improve your credit score You may have to pay a yearly fee for the card You pay interest on the unpaid monthly balance. This means paying more for items than they really cost!

Shark Tank  The prize for the winning team: Use your notes for an upcoming quiz!  I will present your posters to the C&E team and they will choose the product they would most likely invest in

Be the Boss Come up with your own business. 1. Come up with a name, logo & explanation of the business/product 2. Explain the factors of production that are used in the development of your business/product. 3. Describe the goods or services you are providing. 4. Come up with two trade-offs to consider in the running of your business/product. 5. What is(are) the opportunity cost(s) of your business/product?

Team Evaluations  You will be grading your teammates on a scale between 1-5 depending on the number of team members you have  Assign the highest number to the teammate (or yourself) who you believe did the best with this assignment  Assign the lowest number to the teammate (or yourself) who perhaps did not contribute as much or anything to the team  Assign remaining numbers to remaining members based on performance

Shark Tank