1. Good Morning, 8 th Graders! Today’s Agenda: - Intro to Credit / Credit Notes / Funny Money Video - Credit Scores - BrainPop Video/Quiz - Computer Time NEXT: DVD; Family Finance Test on Wednesday Learning Target: I will understand the importance of good money management skills. Language Objective: Students will summarize essential skills for handling credit and debt. Learning Target: I will understand the importance of good money management skills. Language Objective: Students will summarize essential skills for handling credit and debt.

2. In This Unit, You Will Learn: The definition of debt and credit Purpose of debt and credit Impact of interest rates on credit purchases Why it is important to use credit responsibly

3. Debt & Credit Ess. Questions: What is credit? How do I use credit responsibly? Is debt sometimes necessary?

4. What is Debt? Money that you borrow that must be repaid at some point in the future Money that you borrow that must be repaid at some point in the future

5. What is Credit? Credit is a money loan that is given to a borrower for a specified amount and for a specified period of time Credit is a money loan that is given to a borrower for a specified amount and for a specified period of time Examples: loan for buying a car, house; a credit card Examples: loan for buying a car, house; a credit card Credit is a form of debt Credit is a form of debt

6. What is a Credit Card? A credit card is a plastic card with an assigned account number, which allows the holder to purchase goods or services or receive cash on credit. A credit card is a plastic card with an assigned account number, which allows the holder to purchase goods or services or receive cash on credit. This is different from a debit card. With debit cards, you are not using credit. The money is deducted (taken) from cash you already have in the bank. This is different from a debit card. With debit cards, you are not using credit. The money is deducted (taken) from cash you already have in the bank.

7. What does having a credit card mean? Having a credit card (which are generally issued by banks) means the bank is willing to lend you money. Having a credit card (which are generally issued by banks) means the bank is willing to lend you money. Credit cards are a simple way to borrow money from the bank. Credit cards are a simple way to borrow money from the bank.

8. How is using a credit card different from using cash? One BIG difference called interest. One BIG difference called interest. In the case of credit and credit cards, interest is the cost of borrowing money. In the case of credit and credit cards, interest is the cost of borrowing money. Banks offer credit cards because they make money from the interest they charge the credit card holder. Banks offer credit cards because they make money from the interest they charge the credit card holder.

9. How much is the interest? Credit cards have an interest rate associated with them called APR (or Annual Percentage Rate) Credit cards have an interest rate associated with them called APR (or Annual Percentage Rate) APR varies widely, but a typical rate might be around 18.9%. APR varies widely, but a typical rate might be around 18.9%. This means that if you purchased something for $100 with a card with an APR of 18.9%, the cost of the purchase go up by $18.90, equaling $118.90. This means that if you purchased something for $100 with a card with an APR of 18.9%, the cost of the purchase go up by $18.90, equaling $118.90. Therefore, you pay much more than using cash. Therefore, you pay much more than using cash.

10. Important Point… Any money you spend using credit must eventually be repaid.

11. Are credit cards always bad? Simple answer…no. Simple answer…no. Benefits of credit cards: Benefits of credit cards: Good for emergencies Good for emergencies Good for certain large purchases Good for certain large purchases Help you establish a credit rating Help you establish a credit rating

12. You Must Be Responsible With Credit Card Debt Watch your credit card limit, which is maximum amount of money a credit card holder is allowed to borrow using the card. Watch your credit card limit, which is maximum amount of money a credit card holder is allowed to borrow using the card. Pay more than the minimum required each month, ideally pay the balance off. Pay more than the minimum required each month, ideally pay the balance off. You must protect your credit score (also called a credit rating). By the way, what is a credit score? You must protect your credit score (also called a credit rating). By the way, what is a credit score?

13. What is a good credit score?

14. Why Does Your Credit Score Matter? A good credit score can save you thousands of dollars in interest payments on everything from a home loan to a car loan to credit card debt. A good credit score will reduce the cost of auto insurance. A good credit score may help you rent an apartment or get a job. A bad credit score can prevent you from getting cable, a cellphone, or a car at the best rates.

15. Credit / Money Practice ► http://www.channelone.com/credit-card- simulator/ http://www.channelone.com/credit-card- simulator/ http://www.channelone.com/credit-card- simulator/ ► http://www.thirteen.org/finance/games/itco stswhat.html http://www.thirteen.org/finance/games/itco stswhat.html http://www.thirteen.org/finance/games/itco stswhat.html ► http://www.watreasurer.financialfootball.co m/games/trainingcamp/ff/ http://www.watreasurer.financialfootball.co m/games/trainingcamp/ff/ http://www.watreasurer.financialfootball.co m/games/trainingcamp/ff/