SECTION 2: WHAT IS CREDIT Unit 6: Credit. I Can: Differentiate Credit Cards from Debit Cards Describe the importance of APR Define and apply: credit limit,

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Presentation transcript:

SECTION 2: WHAT IS CREDIT Unit 6: Credit

I Can: Differentiate Credit Cards from Debit Cards Describe the importance of APR Define and apply: credit limit, debt, finance charge, leasing, line of credit, loan, principle, rent, rent to own, sales tax, balance transfer, amount past due (on statement), penalty APR Explain what is meant by a smart card

Credit vs. Debit Credit means your are borrowing money and will pay interest on what you have borrowed Debit means you are spending money already in your checking account and you will not pay interest  If you accidently charge more to your debit card than you have in the bank, you will have to pay an overdraft fee!

APR Annual Percentage Rate is as important when borrowing as APY is when investing. This is the PRICE you will pay for borrowing the money  This can be fixed-doesn’t change  Or variable- can change

Reading your statement credit limit: the most you can borrow finance charge: fees related to borrowing line of credit: any credit source extended to you Principle: the amount you bought balance transfer: taking all of the money you’ve charged from one card and moving it to another (with lower APR) amount past due (on statement): amount you didn’t pay on time penalty APR: a higher interest rate charged to you as punishment (for late payments, going over your limit, etc) sales tax: amount you pay beyond the cost of the item you purchased

Other options Leasing: pay to use the product, but you will give it back after a certain amount of times Loan: bank or lender gives you a lump sum, which you pay back with interest Rent: borrow for a short time and pay for that time rent to own: pay rent until you’ve paid entire amount, then you own it. Usually pay 200% higher than to have bought

Can I? Differentiate Credit Cards from Debit Cards Describe the importance of APR Define and apply: credit limit, debt, finance charge, leasing, line of credit, loan, principle, rent, rent to own, sales tax, balance transfer, amount past due (on statement), penalty APR Explain what is meant by a smart card I can prove this by completing activity 2.3