1. DO THIS NOW… Sit in assigned groups Take out homework
Share key ideas with one another about credit card usage and credit scores
Come up with a new list of 7 and 5 key ideas everyone can agree on
Be prepared to share

2. How can we be responsible users of credit?

3. Discussion
What do we need to remember to be responsible users of credit cards? And how do we build strong credit scores?

4. Credit Card Basics Using the bank’s money: Must pay back bank monthly:
Set limit
Set interest rate (APR)
Must pay back bank monthly:
Amount spent PLUS interest

5. Credit Card Interest Calculation
Periodic Interest x Average Daily Balance
Average daily balance:
Sum of each day’s balance / days in billing period
Periodic Interest:
APR / 365
The lesson?
LOWER APR leads to LOWER INTEREST

6. Calculating Minimum Payments
Percentage Method:
Predetermined percentage of balance
Percentage + Interest + Fees:
Exactly as it sounds

7. AVOIDING Minimum Payments
Disadvantages of Paying the Minimum:
Largely paying interest
Not paying down principle
Principal balance will begin to stack
Credit balance will skyrocket
Will negatively impact credit score
The lesson?
ALWAYS PAY MORE THAN THE MINIMUM

8. Fees of Credit Cards Annual Balance transfer Foreign transaction
Late payment
Over the limit

9. Benefits of Credit Cards
Build credit
Rewards perks

10. Credit Score Basics Definition: Purpose: Significance:
Numerical expression of individual’s borrowing history
Purpose:
Determine if borrower is worthy of a loan/credit
Significance:
Determine if loans/credit received
Determine terms of loan/credit

11. Payment History
Late payments?
Missed payments?
35% of score

12. Credit Utilization Line-item utilization Aggregate utilization
Under 30%
Aggregate utilization
30% of score

13. Age of Credit Benefit to score: Harmful to score: 15% of score
Long open accounts
Harmful to score:
Newly opened accounts
15% of score

14. Types of Accounts Benefit to score: Harmful to score: 10% of score
Different types
Harmful to score:
All the same
10% of score

15. History of Applying Benefit to score: Harmful to score: 10% of score
Applying infrequently
Harmful to score:
Applying frequently
10% of score

16. Applying Learning: Credit Cards
Pull out your phones and visit the following website
Click on the title of each credit card to explore its characteristics.
After researching the different credit cards, use a half sheet of paper you can turn in to identify which credit card you would like to apply for in the future and explain your reasoning.
You reasoning MUST cite ideas discussed in today’s reading and group discussions to justify your choice in credit card.
You have 20 minutes

17. Applying Learning: Credit Counseling
In your groups, you will be presented with a packet with two activities:
One will ask you to counsel students on improving their credit scores based on a profile
The other will ask you to determine the impact that credit scores have on the ability of individuals to take out loans
Follow the directions of each section carefully
You will need your phones for the activity – one per group please
Raise your hands and let me know if your group needs help
You have until 5 minutes before the end of class to work on the activities

18. How do credit scores impact an individual’s ability to get a loan?
Discussion
How do credit scores impact an individual’s ability to get a loan?

19. Remainder of Class
Complete journal reflection entry on credit card usage and credit scores