1. Credit Cards are “Interest” ing SS.4.FL.4.1 Discuss that interest is the borrower pays for using someone else’s money. SS.4.FL.4.2 Identify instances when people use credit, that they receive something of value now and agree to repay the lender over time, or at some date in the future with interest. Gr. 2 Financial Literacy

2. Grade 2 Financial Literacy SS.4.FL.4.1, SS.4.FL.4.2 Cash What are some different ways we can pay for things? How do credit cards work? Essential Question

3. Grade 2 Financial Literacy SS.4.FL.4.1, SS.4.FL.4.2 Cash Paying for Things There are several ways to pay for things you buy. Each has advantages and disadvantages. What do you need to have in order to buy things at the mall?

4. Grade 2 Financial Literacy SS.4.FL.4.1, SS.4.FL.4.2 Paying with Cash Cash AdvantagesDisadvantages Most widely accepted method of payment Must withdraw from bank It’s not wise to carry large quantities of money Paying with Cash REAL WORLD MONEY MATH: You give the cashier a $20 bill to pay for a $15 toy. How much change do should you get back? or

5. How much? Grade 2 Financial Literacy SS.4.FL.4.1, SS.4.FL.4.2 Paying with Cash Cash Let’s Practice Counting Money Five dollars = $5 Thirty dollars = $30 Twelve dollars = $12 75 cents $80 39 cents

6. Paying with a Debit Card Grade 2 Financial Literacy SS.4.FL.4.1, SS.4.FL.4.2 Cash AdvantagesDisadvantages Uses money in your account to pay for things. Cannot spend more than you have in your account. Money taken from your account immediately. Secured with a PIN number Need to know your PIN to use (Personal Identification Number) PIN SECURITY: Don’t write your PIN number on the debit card. Why should your PIN be kept private?

7. Paying with a Personal Check Grade 2 Financial Literacy SS.4.FL.4.1, SS.4.FL.4.2 Cash AdvantagesDisadvantages Uses money in your account to pay for things. Takes a few days for bank to take funds from your account There is a possibility that the checking account has no funds. Not all stores accept personal checks anymore. What do you mean I I can’t cash the check for another six months? I wanted to give you something special for your birthday this year.

8. We’ve all seen those plastic cards adults use to pay for things at the store. Credit cards allow you to buy something now and pay it back over time. Grade 2 Financial Literacy SS.4.FL.4.1, SS.4.FL.4.2

9. There are many different types of credit cards. Four of the most common types are pictured below: MasterCard, Visa, American Express, and Discover. Grade 2 Financial Literacy SS.4.FL.4.1, SS.4.FL.4.2 Credit cards may look different but all work the same. Front of Card shows: Bank Name/Logo Account holder’s name Account number Expiration date Back of Card shows: Magnetic strip Security number Signature line

10. When the magnetic strip on the back of your credit card is swiped at the register, your account information is submitted electronically to your bank, who will either approve or decline the transaction. Grade 2 Financial Literacy SS.4.FL.4.1, SS.4.FL.4.2 If the bank approves your transaction, you leave with the item you are purchasing. If the bank declines the transaction you must provide another form of payment in order to complete the purchase. Reasons why your card may be declined: Credit card spending limit reached Late payment

11. When you use a credit card, you are borrowing money from a bank. Banks charge you a fee for borrowing money, called interest. Remember banks, like other businesses, need to make money in order to provide their services. Grade 2 Financial Literacy SS.4.FL.4.1, SS.4.FL.4.2 the ability of a customer to obtain goods or services before payment, based on the trust that payment will be made in the future I’m convenient to use! I let you buy something now and pay later.

12. The amount of interest credit cards charge for lending money depends on the trustworthiness of the person borrowing. If the bank trusts you will pay back the debt on time, your interest fee will be lower than someone who does not. If you charge $100 on a credit card that charges 20% interest, what would your interest fee be? 1% means 1 per hundred. 10% means 10 per hundred. 20% means 20 per hundred. Grade 2 Financial Literacy SS.4.FL.4.1, SS.4.FL.4.2 25% means 25 per hundred. Interest A percentage charged by credit card companies for lending money.

13. Bank charges interest for each month you owe money. Let’s practice calculating interest fees. Grade 2 Financial Literacy SS.4.FL.4.1, SS.4.FL.4.2 You spend $400 on a credit card that charges 20% interest per year How much interest will you be charged for borrowing $400 in a year? Amount you Owe$400 Total Interest Charged over 12 months Total Paid: $80 $480 HINT: $20 interest fee for each hundred borrowed Explain the steps in calculating the interest fee.

14. Grade 2 Financial Literacy SS.4.FL.4.1, SS.4.FL.4.2 Cash AdvantagesDisadvantages Allows you to spend money you don’t have Very easy to overspend and get into debt Easy and convenient to use You get charged interest fees Paying with Credit Miss a payment and your interest rate will increase and you will have to pay late fees as well Good grief! I can’t believe I spent so much money on candy this month.

15. Grade 2 Financial Literacy SS.4.FL.4.1, SS.4.FL.4.2 It’s your lucky day. You now will have a chance to go on a shopping spree. Use what you have learned today to answer the questions on the Shopping Spree handout.

16. Grade 2 Financial Literacy SS.4.FL.4.1, SS.4.FL.4.2 What are some different ways we can pay for things? How do credit cards work? Essential Question

17. Sources Grade 2 Financial Literacy SS.4.FL.5.1, SS.4.FL.5.2 Lesson Adapted from: Credit Cards: Cash versus Credit http://www.moneyinstructor.com/lesson/cashvscredit.asp Finance in the Classroom: Lessons & Activities http://financeintheclassroom.org/passport/second/lang_art.shtml Finance in the Classroom: Handout: Credit Cards http://financeintheclassroom.org/passport/downloads/credit_card.pdf