Presentation on theme: "Credit cards and Debit Cards, Credit and Debt"— Presentation transcript:
1 Credit cards and Debit Cards, Credit and Debt Financial Literacy UnitFCS: MS 2.2.3
2 Before we start… Keep names confidential Instead of saying, “My aunt Julie….”Say, “I know someone who…”Share your experiences with the class, but in a respectful manner
3 Discussion Time How many own a debit or credit card? Do adults you know use credit, debit, both, or neither?What is the difference between a credit card and debit card?Who knows someone who has been in debt?What is the difference between credit and debt?
4 Debit CardThink of a debit card as a “pay now” type of payment. When the card is used, funds are automatically withdrawn from your account. If there is not enough money in your account, you will not be able to purchase the item (or the bank may charge you a fee)
5 Debit Card Debit card issued though this institution Bank Name—Name of bank where the cardholder has an accountDebit card issued though this institutionA bank is a financial institution. Banks can be small and local, or a chain of nationwide banking institutions.
6 Debit Card Computer Chip—New item being phased into cards to increase securityNot all cards have these, only newer cards. The chip generates a unique code for each transaction, while magnetic strips only have the same information that can be stolen.
7 Debit Card Account Number—Links all purchases made with the card to a designated bank accountEvery card has a different account number assigned by bank or company. The number is usually encoded on the card, can feel the number raised up. Embossing was a sign that the card was real, now it is not necessary because most transactions are handled electronically.
8 Debit CardExpiration Date— The debit card is valid and may be used until this dateCard is not valid past expiration date. The company either sends the cardholder a new card, or cardholder has to request a new card.
9 Debit Card Cardholder’s Name— The cardholder’s full name is written out and displayed.Name of the person that owns the card and has singed the needed paperwork,
10 Debit Card Magnetic Strip— When the debit card is swiped, the magnetic strip automatically withdraws funds from the cardholder’s account.Card is activated by swiping it though a device that can read data in the strip.
11 Debit Card Ensures the person using the card is authorized to do so Authorized Signature— Sign in the signature box on the back of the debit card to authorize paymentsEnsures the person using the card is authorized to do so
12 Debit Card Verification Number—This three digit code is located on the back of the card in the signature areaHelps ensure the card is in the cardholder’s possession when making purchasesThis is also called a CVV( card verification value)
13 Debit Card Plastic card that looks like a credit card Electronically connected to a bank accountMoney is automatically taken from the bank account when purchases are madeRequires a PIN (personal identification number)Confirms the user is authorized to access the account
14 To Use A Debit CardSwipe it through the store machine or put into an ATMEnter the PINComplete transactionWhat other places can you use a debit card?
15 ATM Automated teller machine, or a cash machine Can be used to withdraw cash and make depositsAdditional fees may be assessed if the ATM used is not provided by the financial institution sponsoring the card
16 Pros and Cons - Debit Cards Pros ConsConvenientSmallCan be used like a credit cardAllows a person to carry less cashDoes not allow overspendingCan lose track of balance if transactions are not written downOpens checking account up to credit fraudOthers can gain access to the account if the card is lost and PIN is known
17 Credit CardHave the students try and fill in the parts of a credit card before briefly reviewing. Have students answer and explain the different parts.
18 Credit Card What are other credit card companies? Company Name—financial company giving cardholder option of borrowing fundsWhat are other credit card companies?
19 Credit Card Computer Chip—New item being phased in to cards to increase security
20 Credit Card Card Number—Links all purchases made with the card to an account with the card company1st number usually is the cardholders identification numberVisas- start with 4MasterCard's- start with 5Discover- start with 6
21 Credit CardExpiration Date— The credit card is valid and may be used until this date
22 Credit Card Cardholder’s Name— The cardholder’s full name is written out and displayed.A card can be made out to an individual, or a business. Why would companies want a credit card specifically for the company?Business owners want to keep separate business expenses from personal expenses.
23 Credit Card Magnetic Strip— When the credit card is swiped, the magnetic strip charges cardholders account through the companyCardholder does not pay immediately, but pays when they are billed
24 Credit Card Ensures the person using the card is authorized to do so Authorized Signature— Sign in the signature box on the back of the debit card to authorize paymentsEnsures the person using the card is authorized to do so
25 Credit Card Verification Number/CVV (Card Verification Value)- unique 3-4 digit code that provides additional securityOnline purchases usually ask for you to provide CVC number for a transaction
27 Credit Cards Advantages Disadvantages Convenient Useful for emergenciesOften required to hold a reservationPurchase expensive items earlierPossibility of receiving bonuses, such as frequent flyer miles and cash rebatesPaying interest if balance is kept on cardAdditional fees may apply if card is not used properlyTempting to overspendResponsible for lost/stolen cardsRisk of identity theft
28 Do Don’t Credit Cards Pay amount charged in full every month Pay payments on timeKeep track of charges by keeping receiptsCheck monthly credit card statement for errorsMake late paymentsPay only the minimum payment dueGo over the credit limitCharge items that can’t be paid off within the month
29 Credit Vs. DebtCredit: allows people to buy things now, and pay for them later using a lender’s money. Borrow promises to pay back money at a later date Pay amount + interest later Interest: a certain percentage that is owed to the lender for borrowing money Debt is money one person, organization, or government owes to another person
30 Credit Limit- maximum amount of money that can be charged on the card What is a Credit Card?Plastic card that holds pre-approved creditPurchase items nowPay laterCredit Limit- maximum amount of money that can be charged on the card
31 What would you do with an extra $104? Melissa and Skylar each purchased a plane ticket for $500 using their credit cardsthat charge 15% APRPaid full amount owed $500Took 1 month to pay offPaid $0 in interestTotal Paid $500Paid minimum due $50Took 3 years to pay offPaid $104 in interestTotal Paid $604MelissaSkylarWhat would you do with an extra $104?
32 Summary What is a credit card? 1.6.1.G1SummaryWhat is a credit card?How can you avoid paying interest on a credit card?What is the difference between a credit card and a debit card?Plastic card that holds pre-approved creditUsed for the purchase of items now and payment of them laterPay the credit card balance in full every month!Debit card- money is taken from the cardholder’s accountCredit card- money is borrowed and paid back later
33 Debit vs. Credit Card Credit Card Debit Card 1.6.1.G1Debit vs. Credit CardCredit CardDebit CardConnected to an account that holds cardholder’s moneyMoney is immediately taken out of an accountNot connected to an accountMoney is borrowed and paid back laterDebit Card - plastic card that is electronically connected to an account that holds cardholder’s money