1. CREDIT: Day 2

2. Types of Credit Credit Cards Loans

3. Types of Credit: LOANS Loans Let you borrow money that must be repaid with interest Why might you take out a loan? Finance a car Finance a car Pay college tuition Pay college tuition Buy or renovating a home Buy or renovating a home Debt consolidation loan Debt consolidation loan Combines all current debts from various creditors into a single reduced-interest payment plan Combines all current debts from various creditors into a single reduced-interest payment plan Credit line Credit line limit linked to your checking account that gives you bounce-proof protection in case you write a check for an amount that exceeds your account balance. limit linked to your checking account that gives you bounce-proof protection in case you write a check for an amount that exceeds your account balance.

4. Types of Credit: LOANS Secured loans Secured loans Guaranteed by collateral, which is an item of equal or greater value than the amount of the loan, such as a car, home or cash deposit. Guaranteed by collateral, which is an item of equal or greater value than the amount of the loan, such as a car, home or cash deposit. Examples: car loan, mortgage (house loan) Examples: car loan, mortgage (house loan) Unsecured loans Unsecured loans Do not require collateral and are made based on your credit score and ability to repay. Do not require collateral and are made based on your credit score and ability to repay. Examples: student loan, credit cards Examples: student loan, credit cards

5. Types of Credit: LOANS Installment loans Installment loans Payments of fixed amount at the time of your application and approval. Payments of fixed amount at the time of your application and approval. Repaid in fixed monthly payments over a specific period of time. Repaid in fixed monthly payments over a specific period of time. Interest charges are included in the payments. Interest charges are included in the payments. Auto loans and mortgages Auto loans and mortgages

6. Types of Credit: LOANS Amortization schedule: The schedule of payments for paying off a loan. Amortization schedule: The schedule of payments for paying off a loan. Shows interest and principal Shows interest and principal These amounts vary with each payment These amounts vary with each payment Amortization Calculator Activity: Reading amortization schedules

7. CREDIT: The Credit Card

9. Types of Credit Credit cards are perhaps the most common type of personal credit. Credit cards are perhaps the most common type of personal credit. Allow repeated transactions up to a maximum credit limit. Allow repeated transactions up to a maximum credit limit. Each time you charge something, you are borrowing the money until you pay it back. Each time you charge something, you are borrowing the money until you pay it back. You can pay back the full amount when your next bill is due You can pay back the full amount when your next bill is dueOR You can pay the money back over time You can pay the money back over time Pay interest Pay interest Pay a calculated amount until the borrowed amount is repaid (minimum payment) Pay a calculated amount until the borrowed amount is repaid (minimum payment)

10. How a Credit Card Works Activity: Activity: Work in groups of 3 Work in groups of 3 Assign Roles: Assign Roles: 1. Consumer 1. Consumer 2. Store/vendor/seller 2. Store/vendor/seller 3. Credit Card Company 3. Credit Card Company

11. Terms to know: Annual percentage rate (APR) - The yearly percentage rate of the finance charge. Annual percentage rate (APR) - The yearly percentage rate of the finance charge. Introductory rate - A temporary, lower APR that usually lasts for about six months before converting to the normal fixed or variable rate Introductory rate - A temporary, lower APR that usually lasts for about six months before converting to the normal fixed or variable rate

12. Terms to know: Annual fee - A flat, yearly charge similar to a membership fee. Annual fee - A flat, yearly charge similar to a membership fee. Many companies offer "no annual fee" cards today, and lenders who do charge annual fees are often willing to waive them to keep your business. Many companies offer "no annual fee" cards today, and lenders who do charge annual fees are often willing to waive them to keep your business. Finance charge - The dollar amount you pay to use credit. Finance charge - The dollar amount you pay to use credit. May include other charges such as cash-advance fees, which are charged against your card when you borrow cash from the lender. (You generally pay higher interest on cash advances than on purchases -- check your latest bill to find out what you're paying for this service!) May include other charges such as cash-advance fees, which are charged against your card when you borrow cash from the lender. (You generally pay higher interest on cash advances than on purchases -- check your latest bill to find out what you're paying for this service!) Grace period - A time period, usually about 25 days, during which you can pay your credit-card bill without paying a finance charge. Grace period - A time period, usually about 25 days, during which you can pay your credit-card bill without paying a finance charge. Applies if you pay your balance in full each month. Applies if you pay your balance in full each month. Does not apply if you carry a balance forward. Does not apply if you carry a balance forward. Does not apply to cash advances. Does not apply to cash advances.

13. The Parts of the Credit Card The Credit Card Anatomy The Credit Card Anatomy The Credit Card Anatomy The Credit Card Anatomy

14. Credit Cards are good! Pros of Credit Cards Pros of Credit Cards Pros of Credit Cards Pros of Credit Cards Build your credit history Spend someone else’s money for a short period of time Protection for big purchases Extended warranties Budgeting Bonuses Cash back Airline miles Points to make purchases Make money on your credit card

15. Where credit cards can go wrong… Make late payments Fees Interest Poor credit Not paying the full amount Interest When you don't pay your full balance

16. Choosing a Credit Card Visa Mastercard American Express Discover Store credit cards Gas station credit cards Credit card choices Activity – compare credit card offers

17. A Credit Card Statement How to read your credit card statement Activity: Analyze a credit card statement

18. Applying for a Credit Card

19. The Credit Card Application Applying for a credit card  Time at your address  Time at your bank  Income level  Debt level  Age  Credit history

20. Fill out an application Just search “Credit Card Application” on any search engine! Activity – Complete a Walmart credit card application

21. STATIONS 1. The Credit Card statement 1. With teacher 2. Choosing a credit card 1. Compare credit card offerings 3. Apply for credit 1. Complete a credit card application 4. History of the credit card 1. Make a timeline