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CREDIT. Don't Buy Stuff Don't Buy Stuff Don't Buy Stuff Don't Buy Stuff.

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Presentation on theme: "CREDIT. Don't Buy Stuff Don't Buy Stuff Don't Buy Stuff Don't Buy Stuff."— Presentation transcript:

1 CREDIT

2 Don't Buy Stuff Don't Buy Stuff Don't Buy Stuff Don't Buy Stuff

3 What is credit? A contractual agreement in which a borrower receives something of value now and agrees to repay the lender at some date in the future, generally with interest. A contractual agreement in which a borrower receives something of value now and agrees to repay the lender at some date in the future, generally with interest. What is credit? What is credit?

4 The Credit System Consumers Consumers Creditors Creditors Credit bureaus Credit bureaus

5 Your Credit Report Sample Credit Report Sample Credit Report Sample Credit Report Sample Credit Report

6 Your credit score Build credit at a young age Build credit at a young age Your credit score Your credit score SAMPLE CREDIT SCORE REPORT

7 ACTIVITY: In your group of 3, assign roles of the consumer, the credit bureau, the creditor. Use the cards to come up with three different scenarios involving the credit system

8 Interest: APR and APY Interest: The fee charged by a lender to a borrower for the use of borrowed money Interest: The fee charged by a lender to a borrower for the use of borrowed money Principal:The amount borrowed Principal:The amount borrowed APR – Annual Percentage Rate: The yearly cost of a loan, including interest, insurance, and the origination fee (points), expressed as a percentage. APY - Annual Percentage Yield: The rate of return on an investment for a one-year period. APR – Annual Percentage Rate: The yearly cost of a loan, including interest, insurance, and the origination fee (points), expressed as a percentage. APY - Annual Percentage Yield: The rate of return on an investment for a one-year period.

9 Interest, APR, and APY Which is higher: APR or APY? Which is higher: APR or APY? ACTIVITY: ACTIVITY: Groups of 3 – You will each have a different article Discuss and record the answers to the following questions: Discuss and record the answers to the following questions: What is the difference between APR and APY? What is the difference between APR and APY? On what type of accounts would a bank or lender show the APR to you? On what type of accounts would a bank or lender show the APR to you? On what type of accounts would a bank or lender show the APY to you? On what type of accounts would a bank or lender show the APY to you? Explain your answers Explain your answers

10 Interest, APR, and APY QUESTION #1: APR and APY and Savings/Investment Accounts QUESTION #1: APR and APY and Savings/Investment Accounts QUESTION #2: APR and APY and Loans/Credit Cards QUESTION #2: APR and APY and Loans/Credit Cards


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