TAKE CHARGE OF CREDIT CARDS

Page | 1 1.6.1

© Take Charge Today – October 2014 – Take Charge of Credit Cards Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences Take Charge America Institute at The University of Arizona

RECOMMENDED

GRADE LEVELS AVERAGE TIME TO COMPLETE

EACH LESSON PLAN IS DESIGNED AND CONTINUALLY VALUATED “BY EDUCATORS, FOR EDUCATORS.” THANK YOU TO THE FOLLOWING

EDUCATORS FOR DEVELOPING COMPONENTS OF THIS LESSON PLAN.

7‐9

Anticipatory Set & Facilitation: 45 minutes

Conclusion/Assessment Options: 10‐200 minutes

Shelly Stanton, Business Educator and Technology Integration Specialist, Billings, Montana

NATIONAL STANDARDS LESSON PLAN OBJECTIVES

The curriculum is aligned to the following national standards: National Standards for Financial Literacy American Association of Family and Consumer

Sciences Council for Economic Education National Business Education National Jump$tart Coalition Common Core English Language Arts

Upon completion of this lesson, participants will be able to: Identify the purpose of a credit card Demonstrate fluency with credit card terminology Explain how to avoid paying interest on a credit card Assess the advantages and disadvantages of credit

cards Distinguish between positive and negative credit card

behaviors Analyze credit card safety tips

MATERIALS

MATERIALS PROVIDED IN THIS LESSON PLAN

MATERIALS SPECIFIC TO THIS LESSON PLAN

BUT AVAILABLE AS A SEPARATE DOWNLOAD MATERIALS TO ACQUIRE SEPARATELY

DEPENDING ON OPTIONS TAUGHT

Take Charge of Credit Cards 1.6.1.A1 Take Charge of Credit Cards

Vocabulary List 1.6.1.E1 Take Charge of Credit Cards

Information Sheet 1.6.1.F1 Credit Card Statistics Puzzles 1.6.1.H1 What Would You Do? 1.6.1.H2 Take Charge of Credit Cards Note

Taking Guide 1.6.1.L1

Take Charge of Credit Cards Answer Key 1.6.1.C1

Take Charge of Credit Cards PowerPoint Presentation 1.6.1.G1

7 different colors of paper Plain white paper‐ 1 piece

per participant Crayons, markers, and/or

colored pencils Confessions of a Shopaholic

movie

RESOURCES EXTERNAL RESOURCES

External resources referenced in this lesson plan: Common Craft Video “Credit Card Responsibility” http://www.commoncraft.com/video/credit‐card‐responsibility

Consumer Jungle student written articles about credit: https://www.consumerjungle.org/manage‐money/credit

Bankrate statistics on debt: http://www.creditcards.com/credit‐card‐news/credit‐card‐industry‐facts‐personal‐debt‐statistics‐1276.php

Nearpod Presentation for Take Charge of Credit Cards (must have a Nearpod account to utilize): http://np1.nearpod.com/sharePresentation.php?code=efb8ee44e5ba830548d0445bb8aea726‐0

TAKE CHARGE OF CREDIT CARDS Introductory Level

www.takechargetoday.arizona.edu

https://takechargetoday.arizona.edu/about-us/by-educators-for-educators/national-master-educator

https://takechargetoday.arizona.edu/curriculum/standards

https://takechargetoday.arizona.edu/lessonplans/take-charge-credit-cards

https://www.commoncraft.com/video/credit-card-responsibility

https://www.consumerjungle.org/manage-money/credit

http://www.creditcards.com/credit-card-news/credit-card-industry-facts-personal-debt-statistics-1276.php

http://np1.nearpod.com/sharePresentation.php?code=efb8ee44e5ba830548d0445bb8aea726-0

Page | 2 1.6.1

© Take Charge Today – November 2014 – Take Charge of Credit Cards Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences Take Charge America Institute at The University of Arizona

TAKE CHARGE TODAY RESOURCES

Similar lesson plan at a different level: Understanding a Credit Card Lesson Plan 2.6.3

Optional lesson plan resources: Understanding a Credit Card Lesson Plan 2.6.3 Vocabulary Reinforcement Activities Active Learning

Tool 3.0.36 Financial Statistics Puzzle 3.0.4 Confessions of a Shopaholic Active Learning Tool 3.0.41 Honk if You Like Bumper Stickers 3.0.8 Technology Integration Options 3.0.50 PowerPoint Trivia Active Learning Tool 3.0.24

CONTENT EDUCATOR READING PARTICIPANT READING

Materials to support educators when preparing to teach this lesson plan are available on the Take Charge Today website.

Take Charge of Credit Cards Information Sheet 1.6.1.F1

LESSON FACILITATION

PREPARE Visual indicators to help prepare the lesson

INSTRUCTInstructions to conduct the lesson facilitation

CUSTOMIZE

Potential modifications to lesson facilitation

VOCABULARY ACTIVITY (OPTIONAL)

Alphabet Brainstorming Approximate time: 15‐20 minutes Materials to prepare: Alphabet Brainstorming 3.0.36.A1 handout for each participant from the

Vocabulary Reinforcement Activities Active Learning Tool 3.0.36 Instructional text, such as Take Charge of Credit Cards Information Sheet

1.6.1.F1 per participant 1. Distribute an instructional text related to credit cards and an Alphabet

Brainstorming 3.0.36.A1 sheet. 2. Ask participants to read the text and find as many words as they can that relate

to credit cards; when they find a word have them write it on their Alphabet Brainstorming 3.0.36.A1; each letter can only have one term. For the Take Charge of Credit Cards challenge them to find 9 words.

a. For example if they use the word “credit” they cannot use the word credit card or any other word that starts with C.

b. After students have individually written their terms allow them to work in a group to define as many as possible

ANTICIPATORY SET

Approximate time: 5 minutes Materials to prepare: 1 Credit Card Statistics Puzzle 1.6.1.H1 per person 7 different colors of paper

Consider setting a time limit with www.online‐stopwatch.com to keep students focused

Depending on the student ability consider assigning a maximum number of terms to be achieved.

https://takechargetoday.arizona.edu/lessonplans/understanding-credit-cards

https://takechargetoday.arizona.edu/lessonplans/understanding-credit-cards

https://takechargetoday.arizona.edu/lessonplans/vocabulary-reinforcement-activities

https://takechargetoday.arizona.edu/lessonplans/financial-statistics-puzzles

https://takechargetoday.arizona.edu/lessonplans/confessions-shopaholic

https://takechargetoday.arizona.edu/lessonplans/honk-if-you-bumper-stickers

https://takechargetoday.arizona.edu/lessonplans/technology-integration-options

https://takechargetoday.arizona.edu/lessonplans/powerpoint-trivia-active-learning-tool



Page | 3 1.6.1


1. Prepare the puzzle pieces. a. Remember to print each statistic on its own color of paper.

2. Conduct activity a. Give each participant a piece of a puzzle.

i. Direct participants to find others that have the same color paper.

ii. Once they find everyone with the same color paper, the group must put their puzzle together to reveal the financial statistic.

iii. Have each group share their financial statistic either before or during facilitation of the PowerPoint below.

Please note that some of the statistics are embedded into the facilitation PowerPoint, below.

RECOMMENDED FACILITATION

Approximate time: 40 minutes Materials to prepare: 1 Take Charge of Credit Cards Note Taking Guide 1.6.1.L1 per participant Take Charge of Credit Cards PowerPoint Presentation 1.6.1.G1 Pass out Take Charge of Credit Cards Note Taking Guide 1.6.1.L1 to each participant to be completed during facilitation. Please note that some of the statistics from the anticipatory activity above are embedded within the facilitation Present the Take Charge of Credit Cards PowerPoint Presentation 1.6.1.G1. 1. Slide 1: Take Charge of Credit Cards

a. Explain to participants that today they will learn about credit cards and how to use them in a positive manner to avoid “becoming one of the statistics.”

2. Slide 2 to 3: Don’t become the statistic a. Allow students time to brainstorm statistics (or bad stories) they have

heard about credit card debt. This discussion should not include the statistic they are holding from the anticipatory set above.

b. Then have students share what they want to know about credit cards 3. Slide 4: What is Credit?

b. In groups, ask participants to discuss what they believe credit is. c. Discuss the definition of credit as a class. Emphasize the agreement or

“promise” that is made. Credit is not free money; you are obligated to pay back the money.

d. Explain to participants that when using credit not only do you have to pay back the money, but you also have to pay interest.

4. Slide 5: Reference the statistic a. Ask students:

i. What does this mean for a household? ii. What types of people have this much credit card debt? iii. How does a balance like this affect present and future self?

5. Slide 6: What is Interest? a. Ask participants to discuss within their groups what they believe

The statistics may also be discussed at the end of the lesson facilitation.

There are further statistics available in the Financial Statistics Puzzle Active Learning Tool 3.0.4.

Consider having students brainstorm with an online tool such as lino or Poll Everywhere. Refer to Technology Integration Options Active Learning Tool 3.0.50.

The PowerPoint, discussion questions and video have been loaded into a premade Nearpod. See External Resources above.

https://takechargetoday.arizona.edu/lessonplans/financial-statistics-puzzles



https://takechargetoday.arizona.edu/lessonplans/technology-integration-options

Page | 4 1.6.1


interest is. b. Discuss the definition of interest as a class. c. Refer to the slide about average credit card debt and explain that

interest will be charged on this balance that is kept on the credit card(s) 6. Slide 7‐8: Reference the statistics

a. Offer students an extension activity to search to see if they can find a different statistic

b. Ask students if they understand the magnitude of these numbers, if not describe.

7. Slide 9: What is a Credit Card? a. In groups, ask participants to discuss what a credit card is. How is a

credit card different from other types of credit? i. Discuss the definition and characteristics of a credit card as a

class. 8. Slide 10: Reference the statistic and discuss with participants 9. Slide 11: Credit Card Payments

a. Explain to participants that with a credit card, people have different payment options.

b. Explain to participants that even though they can make unequal monthly payments on a credit card, they are always required to pay a specific minimum amount, known as the minimum payment.

c. Ask participants to determine which payment option they believe would be the best.

d. Discuss how the minimum payment amount is usually a very small portion of the total amount due on the credit card.

10. Slide 12: Reference the statistic a. Ask participants:

i. What items cost approximately $76? ii. Why wouldn’t people pay cash or use a debit card?

11. Slide 13: Credit Card Interest a. Explain to participants that credit card interest is known as APR. b. Optional activity: Show a clip from the movie “Confessions of a

Shopaholic.” i. Play from the start of chapter 2 (approximately minute 4:30)

until minute 7:45. 1. This scene will open up discussion regarding topics

throughout the remainder of the lesson. 2. In this scene, Rebecca is on her way to a big interview,

and she wants to purchase a very expensive scarf even though she just received a $900 credit card bill in the mail. She has to pay for the scarf with a combination of cash and multiple credit cards. One of her credit cards is declined and she ends up borrowing money from a stranger to purchase the scarf.

ii. Discuss the movie clip by asking participants the following discussion questions:

1. If Rebecca doesn’t have the money to pay for the scarf now, do you think she will be able to pay the charge to her credit card later?

The Confessions of a Shopaholic Active Learning Tool 3.0.41 is available if the entire movie is shown.


Page | 5 1.6.1


a. Since Rebecca is struggling to pay for the scarf now, chances are she won’t be able to pay for it later especially if she continues to charge items to her credit card.

2. Why was Rebecca’s credit card declined? Do you think this is positive or negative?

a. She reached her credit limit. 3. Does Rebecca “need” the items she is purchasing with

her credit card? a. No, Rebecca wants the items she is purchasing

with her credit card. 4. Do you think Rebecca is using credit cards positively or

negatively? 5. How is Rebecca using credit cards’ negatively?

12. Slide 14: What if only the minimum payment is made every month? a. Ask participants to discuss within their groups what they believe would

happen if only the minimum payment on a credit card is made every month.

b. Show participants the table illustrating what happens to the same purchase when only the minimum payment is made versus paying the entire balance on the credit card.

c. Explain to participants that when only the minimum payment on a credit card is made, the cardholder pays high amounts of interest and makes slow progress towards paying off the credit card.

d. Make sure to emphasize that if a credit card is paid in full every month, the cardholder will pay no interest.

e. *Note to educator: If the “Confessions of a Shopaholic” movie clip was shown it can be discussed here.

i. Do you believe Rebecca is only making the minimum payments on her credit cards?

1. Because Rebecca has reached the credit limit on at least one of her credit cards and owes $900 on another, chances are she is only making the minimum payment if not less. Later in the movie, Rebecca is being plagued by debt collectors, so she wasn’t even making her minimum payments.

13. Slide 15: What is the difference between credit cards and debit cards? a. Ask participants to discuss within their groups what they believe is the

difference between a credit card and a debit card. b. Discuss the differences as a class emphasizing that debit card purchases

are paid immediately while credit card purchases are paid back later. 14. Slide 16: How do you get a credit card?

a. Explain to participants that it is important to examine different credit card offers and choose the credit card that is best for you.

b. Explain that once a credit card application is completed, the applicant isn’t guaranteed to be approved for and receive the credit card.

15. Slide 17: Getting a Credit Card‐ Restrictions a. Explain to participants that consumers under the age of 21 can only

receive a credit card if they can prove that they have sufficient income

Page | 6 1.6.1


to pay the borrowed money back or if they have a cosigner. i. Stress the implications of being a cosigner. A cosigner is equally

responsible for paying back the money borrowed. 16. Slide 18: What are the advantages and disadvantages to using a credit card?

a. Have participants work in their groups to identify three advantages and three disadvantages of using a credit card and record these on their Take Charge of Credit Cards Note Taking Guide 1.6.1.L1.

b. Then show the animated list in the presentation and have students indicate which ones they also had on their list

c. As you show your list have them add to their lists and if they have great ones congratulate their thoughtfulness

d. *Note to educator: If the “Confessions of a Shopaholic” movie clip was shown it can be discussed here.

i. Is Rebecca using oany of the advantages of using a credit card? ii. Is Rebecca experiencing any of the disadvantages of using a

credit card? 1. Yes, she is overspending and using her credit card for

“emergencies” that really aren’t emergencies. 17. Slide 19: Responsible Credit Card Use

a. Have participants work in their groups to identify three things that a person should do in regards to a credit card and three things a person should not do in regards to a credit card

b. *Note to educator: If the “Confessions of a Shopaholic” movie clip was shown it can be discussed here.

i. Is Rebecca using a credit positively? 1. No, she is not paying her balances in full, she isn’t

tracking her charges or keeping her receipts ii. How is Rebecca negatively using a credit card?

1. She is reaching the credit limits, charging items that she can’t pay off within the month, and she isn’t tracking her expenses.

18. Slide 20: What happens when a credit card is used irresponsibly? a. Explain to participants when a credit card is used negatively, the

cardholder is often charged penalty fees and higher penalty interest rates.

b. Explain to participants that Penalty APR is usually charged in addition to the late payment and over‐the‐limit fees.

c. Explain to participants that in addition to being charged fees and higher interest, a cardholder could pay large amounts of interest and accumulate large amounts of debt.

d. *Note to educator: If the “Confessions of a Shopaholic” movie clip was shown it can be discussed here.

i. Based on what you know about Rebecca’s credit card use, what do you believe will happen to her?

1. Rebecca will most likely have to pay a large amount of interest and fees, including an over‐the‐limit fee. She will have a hard time paying back her credit card bills.

19. Slide 21: What is a Credit Card Statement? a. Discuss what a credit card statement is and what is included on a credit

If participants are not using the Take Charge of Credit Cards Note Taking Guide 1.6.1.L1, then give each group a large piece of butcher paper to complete the brainstorming activity. The butcher paper can be split into four sections to complete brainstorming on slide 18.

Common Craft offers a short (2 minute) video that explains how credit cards work and how to use them responsibly. The URL can be found in the Resources section above.

Page | 7 1.6.1


card statement. b. Ask participants to determine why it is important to examine a credit

card statement. i. To check for errors and fraudulent charges ii. To determine when the payment due date is to ensure the

payment is made on time. 20. Slide 22‐23: Credit Card Safety Tips

a. Explain to participants why it is important to keep credit cards and credit card information safe.

b. Discuss the credit card safety tips. 21. Slide 24: Summary

a. Assess participant learning by asking summary questions and discussing.

22. Slide 25‐26: Summary a. Review some of the main points of the lesson.

CONCLUSION There are three conclusion options provided for this lesson. Option 1: What Would You Do? Option 2: Bumper Stickers Option 3: Don’t Become the Statistic Trivia

What Would You Do? Approximate time: 12 minutes Materials to prepare: What Would You Do? 1.6.1.H2 per group of participants 1. Complete the What Would You Do? 1.6.1.H2 activity.

a. Pass out one What Would You Do? 1.6.1.H2 to each group of participants.

b. Participants will read the scenarios and decide as a group what they would do in that situation.

c. Each group will take turns reading their scenario cards aloud and sharing what they would do in that situation.

Bumper Stickers Approximate time: 10‐15 minutes Materials to prepare: Refer to the Honk if You Like Bumper Stickers Active Learning Tool 3.0.8 for

materials. o Plain white paper‐ 1 piece per participant o Crayons, markers, and/or colored pencils

1. Participants will create a bumper sticker that explains how to use a credit card responsibly. Refer to the Honk if You Like Bumper Stickers Active Learning Tool 3.0.8 for directions. The Bumper Sticker Rubric 3.0.8.B1 is available as a grading tool.

Extend this activity by having students create a digital or artistic story.



Page | 8 1.6.1


Don’t Become the Statistic Trivia Approximate time: 10‐15 minutes Materials to prepare: Don’t Become the Statistic Take Charge of Credit Cards Trivia 3.0.24.G4 PowerPoint Trivia Active Learning Tool 3.0.24 1. Present the Don’t Become the Statistic Take Charge of Credit Cards Trivia

3.0.24.G4. 2. Go to the PowerPoint Trivia Active Learning Tool 3.0.24 for facilitation

instructions.

ASSESSMENT There are two assessment options provided for this lesson. Option 1: Reinforcement Worksheet Option 2: Confessions of a Shopaholic

Reinforcement Worksheet Approximate time: 10 minutes Materials to prepare: 1 Take Charge of Credit Cards 1.6.1.A1 per participant

1. Complete Take Charge of Credit Cards 1.6.1.A1 as instructed.

Confessions of a Shopaholic Approximate time: 200 minutes Materials to prepare: Confessions of a Shopaholic Active Learning Tool 3.0.41 1. Complete the Confessions of a Shopaholic Active Learning Tool 3.0.41.

https://takechargetoday.arizona.edu/lessonplans/powerpoint-trivia-active-learning-tool


Page | 9 1.6.1.E1


Take Charge of Credit Cards Vocabulary List

TERM DEFINITION

1 Annual fee A yearly fee that may be charged for having a credit card

2 Annual percentage rate (APR)

The cost of credit expressed as a yearly interest rate

3 Credit Receiving goods or services now and paying for them later

4 Credit card A plastic card with a line of credit that has been established in advance

5 Credit card offer This displays the cost of a credit card, including fees and interest.

6 Credit limit The maximum dollar amount that can be borrowed

7 Due date The date the minimum payment must be made

8 Introductory rate The APR charged during the credit card's introductory period after a credit card account is opened

9 Late payment fee Fee charged when a credit card holder does not make the minimum monthly payment by the due date

10 Minimum payment The smallest amount that must be paid on a credit card account each month

11 Over‐the‐limit fee Fee charged if the credit card account balance goes over the set credit limit

12 Penalty APR The interest rate charged on new transactions if the penalty terms in the credit card contract are triggered

13 Pre‐approved When someone has passed an initial credit check

14 Returned payment fee

Fee charged if the cardholder makes a payment but does not have enough money in that account to cover the payment

Page | 10 1.6.1.H1


Credit Card Statistics Puzzles

STATISTIC 1

The average balance per

open credit card is $1,157

Page | 11 1.6.1.H1


STATISTIC 2

U.S. credit card debt is

$793.1 Billion

Page | 12 1.6.1.H1


STATISTIC 3

U.S. households that had

credit card debt owed an

average of $15,799

Page | 13 1.6.1.H1


STATISTIC 4

There are 333.6 million

credit cards in force

nationally with 56% of them

having monthly activity

Page | 14 1.6.1.H1


STATISTIC 5

The average total debt

among Generation Y in

2013 was $23,332

Page | 15 1.6.1.H1


STATISTIC 6

34% of Americans reported

paying only the minimum

credit card payment

Page | 16 1.6.1.H1


STATISTIC 7

The average value per

credit card transaction is

$76 for consumers

Page | 17 1.6.1.L1


Take Charge of Credit Cards Note Taking Guide

Total Points Earned

Name

Total Points Possible

Date

Percentage

Class

What have you heard about Credit Cards? What do you want to know about credit cards?

What is credit?

What is interest?

What is a credit card?

A credit card is

a form of

credit!

What is a credit limit?

What is a minimum payment?

Page | 18 1.6.1.L1


What is APR?

How can interest charges be avoided on a credit card?

What is a debit card?

What two steps are involved with getting a credit card?

Are there any restrictions to receiving a credit card?

1.

2.

Page | 19 1.6.1.L1


WHAT ARE THE ADVANTAGES AND DISADVANTAGES TO USING A CREDIT CARD?

RESPONSIBLE CREDIT CARD USE

DO

ADVANTAGES DISADVANTAGES

DON’T

Page | 20 1.6.1.L1


What is a late payment fee? What is an over‐the limit fee? What is Penalty APR?

What are two things you learned about credit cards that you found important?

What are two questions you still have about credit cards?

Page | 21 1.6.1.H2


What Would You Do?

Antonio recently charged groceries to his credit card. The store clerk asked Antonio if he would like her to print a copy of the credit card receipt for him. Antonio prefers to save paper, so he did not have her print a receipt. What would you do in this situation?

1

2

3

4

5

1.6.1.H2

1.6.1.H2

1.6.1.H2

1.6.1.H2

1.6.1.H2

WHAT WOULD YOU DO? When Sam returned home from the grocery store, he realized that he did not have his wallet. His wallet contains his credit card, debit card, driver’s license, and some cash. What would you do in this situation?

WHAT WOULD YOU DO? Etta received her credit card statement in the mail. She owes $100 on the credit card but has decided to only pay the minimum payment of $15 this month. What would you do in this situation?

WHAT WOULD YOU DO? Carrie used her new credit card to make several purchases but has not signed the back. Carrie decides it is not necessary, because none of the store clerks have mentioned it to her. What would you do if it were your credit card?

WHAT WOULD YOU DO? Ryan had just returned home from school when the phone rang. The person on the other end said she was from his bank and needed to know his credit card number to verify his account. What would you do in this situation?

WHAT WOULD YOU DO?

Page | 22 1.6.1.H2


WHAT WOULD YOU DO? Chelsea closed one of her credit card accounts, and she doesn’t know what to do with the credit card. What would you do with the credit card?

WHAT WOULD YOU DO? Ruben found his credit card statement in a stack of papers on his desk. The credit card payment for the month was due last week. Ruben decided that since he is already late paying his bill for the month that he would wait until next month to make the payment. What would you do in this situation?

6

7

8

9

10

1.6.1.H2

1.6.1.H2

1.6.1.H2

1.6.1.H2

1.6.1.H2

WHAT WOULD YOU DO? Kevin received his credit card statement this week and glanced over it. He noticed there were several items charged on his card that he did not purchase. What would you do in this situation?

WHAT WOULD YOU DO? Trent’s friend Sheila has asked him to be a co‐signer on a credit card she is applying for. Sheila explains to Trent that all he has to do is sign a piece of paper. What would you do in this situation?

WHAT WOULD YOU DO? Angie just turned 21 and has received numerous credit card offers in the mail. She doesn’t need a credit card, so she tossed the unopened envelopes in her waste basket. What would you do with the credit card offers?

Page | 23 1.6.1.A1


Take Charge of Credit Cards

Total Points Earned

Name

25 Total Points Possible

Date

Percentage

Class

Directions: Match the following terms with the correct definitions. (1 point each)

1. _______ Fee charged when a cardholder does not make the minimum monthly payment by the due date.

2. _______ The price of money

3. _______ When goods, services, or money is received in exchange for a

promise to pay a definite sum of money at a future date.

4. _______ The maximum dollar amount that can be charged on a credit card.

5. _______ The interest rate charged on a credit card account each month.

6. _______ Minimum amount of a credit card bill that must be paid every month.

7. _______ A higher interest rate that is charged on new transactions.

8. _______ The date the minimum payment is due.

9. _______ Charged if the amount of money charged goes over the card’s credit limit. Directions: Identify the following statements as positive or negative uses of a credit card. Place a “P” in the blank

if the action is a positive use of a credit card and place a “N” in the blank if the action is a negative use of a credit

card. (1 point each)

10. _______ Paying the amount charged to a credit card in full every month

11. _______ Paying credit card payments on time

12. _______ Paying only the minimum payment due

13. _______ Keeping track of all charges by keeping receipts

14. _______ Going over the card’s credit limit

15. _______ Checking the monthly credit card statement for errors

16. _______ Charging items that can’t be paid off within the month

A. Annual Percentage Rate B. Credit C. Credit Limit D. Due Date E. Interest F. Late Payment Fee G. Minimum Payment H. Over‐the‐limit fee I. Penalty APR

Page | 24 1.6.1.A1


Directions: Answer the following questions.

17. How can a person avoid paying interest on a credit card? (1 point)

18. What is the difference between a credit card and a debit card? (2 points)

19. What does it mean to be a co‐signer on a credit account? (1 point)

20. What are two advantages and two disadvantages to using a credit card? (2 points)

21. Why is it important to examine a credit card statement? (1 point)

22. What are two safety tips that should be followed when using a credit card? (2 points)

© Take Charge Today – November 2014 – Take Charge of Credit Cards Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences at the University of Arizona

Take Charge of Credit Cards Don’tbecomeastatistic

Credit is when goods,

services, or money is

received in exchange for a

promise to pay a definite sum of money at a future date.

The person who is lending the money is saying, in effect,

he believes the borrower is willing and able to keep his

promise to pay the money back, plus interest. Interest is

the price of money.

•Requests money, goods or services from a lender

Borrower

•Gives borrower credit if they believe money will be paid back

Lender•Pays back the lender with interest

Borrower

Whywouldapersonusecredit?

A credit card is a plastic card that holds pre‐approved credit, which

can be used for the purchase of items now and payment of them

later. In the case of credit cards, individuals can borrow as much

money as needed as long as they do not go over the credit limit,

which is the maximum amount of money that can be charged on the credit card. Every credit card has a

different credit limit amount, which may be large or small. The amount of money charged on a credit card

may be paid back in one single payment or a series of equal or unequal monthly payments. However,

interest is charged to a credit card each month the amount of money owed is not paid in full. The longer the

cardholder takes to pay off the amount of money charged, the larger the total interest charges will be.

1.6.1.F1

2


Buynow‐paylater,what’sthecatch?Credit card companies require cardholders to make a

minimum payment, which is the minimum amount of a credit

card bill that must be paid monthly. However, the minimum

payment is usually only a small portion of the total amount

that the cardholder owes on the credit card. Therefore, a

cardholder who only makes the minimum payment every

month will pay lots of interest and make slow progress

toward paying off what is owed on the credit card.

Melissa and Skylar each purchased a plane ticket for $500 using their credit cards that charge 15% APR

Paid full amount owed

$500

Took 1 month to pay off

Paid $0 in interest

Total Paid $500

Melissa

Paid minimum due $50

Took 3 years to pay off

Paid $104 in interest

Total Paid $604

Skylar

Whatwouldyoudowithanextra$104?

In order to receive a credit card, a person should first examine

various credit card offers. A credit card offer displays the costs of a

credit card, including interest rates and fees charged.

To receive a credit card, consumers must be 21 years of age or older. Consumers under 21 can still get a

credit card, but they need to either have a co‐signer or show documentation

of sufficient income to make payments. If someone agrees to be a co‐signer

on an account, they are equally responsible for the loan.

1.6.1.F1

3


Wouldyoubeaco‐signeronacreditcard?Whyorwhynot?

Convenient

Useful for emergencies

Reservations

Possible benefits

Paying interest

Additional fees

Temptation to overspend

Responsible for lost or stolen card

Good

Bad

&

In order to take advantage of the benefits of a credit card, a cardholder should use a credit card

responsibly. When a credit card is used irresponsibly, penalty fees and penalty interest are often charged

to the cardholder. A late payment fee is charged when a cardholder does not make the minimum

payment by the due date. An over‐the‐limit fee is charged if the amount of money charged goes over the

card’s credit limit. In addition to paying

these fees, cardholders often have to

pay penalty interest if late payments

are made or credit limits are exceeded.

Penalty APR is a higher interest rate

that is charged on new transactions.

It is important to understand the difference between a credit card

and a debit card. A debit card is a plastic card that looks like a credit

card, but is electronically connected to a depository institution

account that holds the cardholder’s money. When a debit card is

used to make a purchase, the money is immediately taken out of the

account. In contrast, a credit card transition is not linked to an

account and money is not withdrawn immediately.

1.6.1.F1

4


Whatarethreeimportantthingstocheckonacreditcardstatement?

If someone acquires a credit card or credit card information

fraudulently, they can make charges with that card.

Report lost or stolen cards

Sign the back with "See I.D."

When closing a card notify the

company

Never give out your card number

unless for a purchase

Keep a list of accounts in case card is stolen

Whataretwothingsyouwilldowhenyougetyourfirstcreditcard?

Credit card statements summarize important information about

a credit card account. They are sent to the cardholder every

month and include information regarding credit card use from

the previous month. The information on a credit card statement includes transactions the cardholder has

made during the previous month, the current amount owed on the

credit card, the amount of the minimum payment due, and the

payment due date, which is the date the minimum payment must be

paid. To use credit cards in a responsible manner, cardholders should

examine their credit card statements to check for false charges and

make sure payments are made on time.

1.6.1.F1

Documents

TAKE CHARGE OF CREDIT CARDS