Credit: Effects on Spending Habits

Credit Cards

100

Name three advantages of using a credit card.

Build credit, security, cash back rewards, etc

200

What is credit?

Credit is a contractual agreement where a borrower receives something of value (money, goods, or services) immediately from a lender and agrees to repay the debt at a later date, typically with interest and fees.

300

The lowest amount possible that a credit card user is required to pay per month?

Minimum Payment 

400

What are the different types of credit?

_{Revolving Credit: come with a line of credit that you can draw on, pay back and draw on again. Credit cards and lines of credit are the most popular forms of revolving credit.}

_{Installment Credit: lump-sum disbursement, which you pay back in fixed monthly installments. This includes personal loans, student loans, auto loans and mortgages.}

_{Service Credit: type of account you have with anyone who provides you with a service and bills you monthly. example, cellphone bills}

500

What is the some of the biggest questions you need to ask yourself before spending on your credit card?

1.Can I pay this in full at the end of the month?

2.Is this purchase worth it, or can I wait?

3. What does paying this off look like?

4. Will I keep my balance below 10-30% of my spending? 

Credit Scores

100

What credit score range provides more opportunities and benefits when you’re ready to buy a house?

A credit score of 740 or higher typically provides the best opportunities and benefits when buying a home, including lower interest rates, better loan terms, and more lender options

200

How could you raise your credit score?

Pay bills on time, don't miss a payment, get on budget, only use a credit cards for certain payments. 

300

True or False: Closing a credit card always helps your credit 

False

400

How does missing payments affect your credit score?

It can significantly lower your score and stay on your report for years.

500

Why do many people avoid checking their credit score?

Fear, shame, or anxiety—avoiding bad news feels safer than facing it.

Building Credit

100

The following financial products will help you build a credit history EXCEPT...

1) Debit card
2) Secured credit card
3) Home mortgage
4) Credit card

Debit Card

200

What is the most important factor of building up your credit?

Pay your bills on time!!

300

What is credit utilization?

Hint: Don't spend more than 30% of your credit limit 

Your credit utilization rate is the percentage of available credit that you’re using on your credit cards and other lines of credit. It’s based on the balances that appear in your credit report.

400

Freebie: 

Which of these should never be trusted with your credit card?

A. A toddler in Target
B. You at 11:47 p.m. scrolling online
C. Someone who says “treat yourself”
D. All of the above

D: All of the above

500

Why is consistency more important than “big wins” in building credit?

Small, steady habits build trust—just like relationships

Spending/Habits

100

What are unconscious pressure we face when it comes to spending?

Peer influence, social media, perceived social standards (I have to have the latest social trends to be accomplished), emotional spending, denial. 

200

What is the psychological impact of growing debt?

Stress, anxiety, and a sense of hopelessness, especially as the debt seems to grow despite efforts to control it.

(This emotional toll can further exacerbate the situation, as individuals might resort to more credit card use to cope with these negative feelings, thus perpetuating the cycle.)

300

How does advertising effect your spending?

Advertisements have one main goal: Convince you to buy something. They do this by playing on your emotions, like happiness, nostalgia, sadness, anger, or fear. Some of the ways advertising plays on you include:

- Brand preference 

- Desire creation

- Awareness boost

400

Psychology question: Why do credit cards make it easier to overspend?

Because you don’t feel the “pain” of spending right away—it doesn’t feel like real money leaving.

500

What is one habit that helps reduce overspending?

Waiting 24 hours, using cash, or tracking spending.

Breaking Debt Cycles

100

What consist of a budget plan that will help eliminate debt? (At least four things)

1. Tracking all income and expenses to understand where your money is going.
2. Identifying areas where you can cut back on spending.
3. Allocating funds to pay off debts as quickly as possible.
4. Planning for future expenses to avoid falling back into debt.

200

What are some ways to wisely use a credit card?

• Reserve credit card use for necessary purchases rather than impulse buys.
• Aim to pay off the entire balance each month to avoid interest charges.
• If you carry a balance, prioritize paying it down quickly.
• Be mindful of credit card limits and strive to use a small percentage of available credit.

300

What is the debt snowball method?

Paying off the smallest debt first to build motivation.

400

Why do people stay stuck in debt cycles?

Survival mode, lack of support, emotional spending, and not enough income—not failure.

500

What is the FIRST step to breaking a debt cycle?

Awareness—knowing what you owe and creating a simple plan.