1. Cost of Credit
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2. Learning Outcomes
Students will discuss the pros and cons of credit card use and the true cost of using credit. Students will examine and evaluate credit card statements and credit card offers. Students will investigate smart financial principles.
2015 Educurious Partners--All rights reserved UNIT 3 LESSON 8

3. Lesson Tasks
Complete the Cost of Credit Anticipation Guide & review answers Discuss credit card case study and simulation Discuss pros and cons of getting a credit card based on the case study and simulation Collect information to use as evidence on your Cost of Credit Anticipation Guide
2015 Educurious Partners--All rights reserved UNIT 3 LESSON 8

4. Cost of Credit Anticipation Guide
To get ready for the new information you’re about to learn, complete the Cost of Credit Anticipation Guide based on what you know right now.
2015 Educurious Partners--All rights reserved UNIT 3 LESSON 8

5. Cost of Credit Anticipation Guide-KEY
As your teacher reviews the answers for the Cost of Credit Anticipation Guide, mark the correct answers. It will be important to keep it handy as you complete the tasks in this lesson. You will be collecting evidence to support your initial answers.
2015 Educurious Partners--All rights reserved UNIT 3 LESSON 8

6. Using Credit Cards
Credit cards can be tools that can be used wisely or they can be dangerous temptations that can get you in real financial trouble. Part of using credit cards wisely (or choosing not to use them) is understanding how they work and when the best time to use them might be. You will investigate a sample credit card offer, a sample credit card statement, and when you might choose to use a credit card.
2015 Educurious Partners--All rights reserved UNIT 3 LESSON 8

7. Credit Card Case Study and Simulation
You have always paid for everything out of your own bank account. You’re in college now and have a part time job on campus.
You receive credit card offers all the time and usually ignore them. Your friends have cards and say they are trying to build their credit score, but your system works for you.
You earn $250/week and have $500 saved. This week, however, your car needs a new battery, you have medical bills to pay from last month when you had strep throat, and you got news of your cousin’s upcoming wedding which is out of state.
(*See the example credit card offer on next slide)
2015 Educurious Partners--All rights reserved UNIT 3 LESSON 8

8. Credit Card Case Study and Simulation
The next credit card offer in your box has an introductory 0% APR and no annual fee.
(Sample credit card offer from this site.)
2015 Educurious Partners--All rights reserved UNIT 3 LESSON 8

9. Credit Card Case Study and Simulation
What do you do? What do you need to know before making a decision? Discuss the pros and cons regarding the choices you face.
2015 Educurious Partners--All rights reserved UNIT 3 LESSON 8

10. Credit Card Case Study and Simulation
As a class, divide into two groups and discuss the pros and cons of the credit card case study. Pro= Signing up for the credit card offer. Con= Not signing up for the credit card offer. What choices could you make on either side of the scenario?
2015 Educurious Partners--All rights reserved UNIT 3 LESSON 8

11. Credit Card Pros & Cons Pros: Cons:
You may need some background information on APR and introductory rate. Visit these websites to find a glossary of terms:
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12. What’s Your Credit Card Knowledge…?
Make sure you have your Cost of Credit Anticipation Guide available. You will be collecting evidence for and against each statement throughout the lesson.
2015 Educurious Partners--All rights reserved UNIT 3 LESSON 8

13. What Is a Credit Card Purchase?
A credit card purchase is a loan from a financial institution.
Things to consider:
Higher interest rates
Significant fees
Easier for YOU to spend more
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14. Credit Card Terminology
Credit limit: how much money you can put on your card Variable interest: the rate can be changed based on other financial indicators Fixed rate interest: the rate is the same from month to month
2015 Educurious Partners--All rights reserved UNIT 3 LESSON 8

15. Credit Card Terminology
Balance: how much money you have to pay on your card Minimum payment: the smallest amount you have to pay on your card each month Introductory rate: the interest rate applied for a short period of time.
2015 Educurious Partners--All rights reserved UNIT 3 LESSON 8

16. Credit Card Terminology
Transaction fees: money charged to you if you use your card to get cash, make a late payment, go over your credit limit, etc. Interest rate: the price of using someone else’s money
2015 Educurious Partners--All rights reserved UNIT 3 LESSON 8

17. APR and Fees
What do you notice about the APRs listed below? (Don’t be fooled by the 0% APR– it won’t last long!)
Sample APRs (as of 6/15):
National Average: 14.99%
Low Interest: 11.62%
Student: 13.14%
Reward: 15.12%
Instant Approval: 17.93%
Bad Credit: 22.73%
*Remember…the lower the better!!!
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18. Choosing a Credit Card
You will want to choose a credit card based on your needs and spending habits. There are many options to choose from, but you will look at four.
2015 Educurious Partners--All rights reserved UNIT 3 LESSON 8

19. Cost of Credit Choosing a Card
Complete the Cost of Credit Choosing a Card activity based on your needs and spending habits.
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20. Look for the Schumer Box
The “Schumer Box” named after Charles Schumer, a congressman at the time, and who is now a senator. He is responsible for legislation requiring credit card promotions clearly outline their terms.
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21. Reading Your Credit Card Statement
When you determine you want to get a credit card, you will need to read the credit card statement carefully. Credit card statements can be tricky to decode and you want to make sure you understand what you see.
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22. Reading Your Credit Card Statement
Look at the example credit card statement –Cost of Credit Statement. Match the number with the correct term, based on the definition.
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23. Review
What were some of the factors that helped you make a decision about whether or not to accept a credit card offer? How can not understanding how to interpret your credit card statement impact your personal finances?
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24. Review Answers
What were some of the factors that helped you make a decision about whether or not to accept a credit card offer?
Possible answers may include:
Build credit history
Have money in an emergency
Pay in full=no extra charge
Protection of consumer
There are fees from overspending or late payments
You are encouraged to overspend
You can end up in debt
How can not understanding how to interpret your credit card statement impact your personal finances?
May not realize changes in interest rates.
There can be other fees and interest charges in the terms
You may not make the payment on time
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25. Complete the Lesson… Now complete the Cost of Credit Reflection.
2015 Educurious Partners--All rights reserved UNIT 3 LESSON 8