1. LESSON TWO: PERSONAL SPENDING
DEBIT AND CREDIT
LESSON TWO: PERSONAL SPENDING

2. INTRODUCTION
DEBIT CARD: used like cash. Linked to a checking or savings account. Paying NOW for merchandise
PAYPAL: online payment service that can be linked to savings, checking or credit card account

3. INTRODUCTION
CREDIT CARD: provides an instant loan to a consumer from a bank or other financial institution.
money will be repaid with interest if the debt is not paid in full each month

4. INTRODUCTION CREDIT: the ability to borrow money advantages:
Freedom to carry small amounts of cash
Opportunity to establish a good credit history
Ability to track expenditures
Financial flexibility
Credit is not free!

5. INTRODUCTION Credit is not additional income!
A credit card is an extension of your checking account---not an extension of your paycheck
Too much credit card debt can be burdensome and reduce the amount of money available to spend on other items
Can lead to foreclosure on your property and bankruptcy

6. VOCABULARY Bankruptcy Debit card Cash Debt Check Foreclosure Credit
Credit card
Debit
Debit card
Debt
Foreclosure
Paypal

7. ADVANTAGES OF DEBIT AND CREDIT CARDS
Debit card
Credit card

8. QUESTIONS A DEBIT CARD IS JUST ANOTHER NAME FOR A CREDIT CARD.
FALSE
DEBIT MEANS WITHDRAWAL OR DEDUCTION
TRUE
DEBIT CARD HOLDERS ARE CHARGED INTEREST EACH TIME THEY SWIPE THEIR CARDS

9. QUESTIONS CREDIT CARDS ARE A BUY-NOW-PAY-NOW PAYMENT OPTION
FALSE
CREDIT CARDS ARE A SAFE WAY TO PAY FOR ONLINE PURCHASES
TRUE
CREDIT CARDS ARE FREE MONEY

10. WHAT HAPPENS IF YOU CAN’T PAY FOR THE THINGS YOU BUY?
Let’s look at a credit card statement

11. Cost of Using Credit Purchase price of goods Minimum monthly payment
Time to pay off debt
Interest paid
True cost
$1,000
$20
8 years
$863
$1,863
$2,500
$50
23 years
$5,363
$7,863
$5,000
$100
35 years
$12,863
$17,863

12. Needs vs. Wants
If you had the money to buy the number one thing on your must-have list, what would you buy?
Is this a need or a want?
Let’s look at the advantages and disadvantages of using a debit card

13. Needs vs. Wants
Now lets look at the advantages and disadvantages of using a credit card
On the credit card statement:
What does Stacie owe on her credit card
Is Stacie charging more than she is paying off
Why might Stacie have $35 in Fees Charged on her bill
What is Stacie’s annual fee for the use of her card?
What will happen to Stacie’s finances over time if she keeps the same spending habits and pays the minimum due?

14. VOCABULARY Annual fee APR Credit Limit Finance Charges
Minimum Payment Due
Previous Balance