Intro to Credit
Credit can only be used for large purchases, like a car or home: T/F
False
What is one benefit of borrowing money from a friend or family member instead of from the bank?
Friends and family will typically work with you to set up a repayment plan you can afford
What is the key difference between a credit card and a debit card?
Credit cards allow you to borrow money to pay for things, while debit cards take money straight from your own checking account
Name three of the Five factors that impact credit score
Payment History
Credit Mix
Length of History
New Credit
Amount owed
what does the word "principal" mean?
amount you borrowed
When you use credit, you have to pay it back with interest: T/F
True
Justin really wants to attend the 8th-grade graduation ceremony, dance, and field day, but all the tickets combined cost $75, and he doesn't have that much. Justin has no job, gets no allowance, and his birthday was just last month, so he's not expecting any gifts soon. What's a potential downside of asking his friend Kylie for a loan?
It might cause problems in their friendship if Justin doesn't repay her on time or if he then asks for even more money
Kervin really wants to buy a new bike because his old one is too small now. He's trying to decide if he should use his debit card or credit card. What's one reason he should be careful about using credit?
Credit will charge him interest every month until he repays his full balance
Julie is applying for an auto loan. Why is her credit score important?
Her credit score affects the interest rate she will pay on the loan
money you borrow now and agree to pay back later
Loan
Where can you go to get a loan?
Banks, Credit Unions, Finance Companies
Craig isn't sure if he should open up a credit card account or get a bank loan. What question is MOST useful in helping him decide which financial product he should get?
Are you trying to make a bunch of small purchases over time or one large purchase?
Anita is under 18 and wants to get a credit card. What should she do?
Be added as an authorized user on her mom’s credit card
Why should you care about your credit score.
A high credit score will make it easier for to get loans or credit cards with better interest rates
The amount of money that you still owe on a loan or credit card.
Balance
Is it better to get a student loan or put your tuition on a credit card?
Student Loans
What is the best way to avoid going into large debt on your credit card?
Pay your full balance every month
Using this portion of a credit card statement, how much did the credit card owner pay toward their bill last month?
$167.49
is like a report card that shows how well you’ve paid back money in the past.
Credit History / Score
How long you have to pay back the loan
Term
The longer your loan term, the __________ you pay in total. The higher your interest rate, the __________ you pay in total.
More; more
List at least three things you should do if you decide to loan money to family or friends.
Agree on terms
Check income
What else could we do
Do you have the money
GET IT IN WRITING
According to this portion of a credit card statement, how much did the cardholder pay in total interest this billing cycle?
$1.60
What is the single most important thing in your credit history!
The Number of ON-TIME Payments
A fee for borrowing the money
Interest Rate