What is Credit?
What does it mean to use credit?
Borrowing money now and paying it back later.
What is a credit card?
A card that lets you borrow money to buy things and pay later.
What is interest?
The extra money you pay when you borrow money and don’t pay it back right away.
What is a credit score?
A number that shows how good you are at paying back borrowed money.
Paying your credit card in full every month.
Smart! You avoid interest and build credit.
True or False: Credit is free money.
False. You have to pay it back, often with interest.
What happens if you don’t pay your full credit card bill?
You get charged interest.
Is it better to have high or low interest on a credit card?
Low! That means you pay less extra money.
What’s a good credit score range?
Typically 670 to 850 is considered good or excellent.
Maxing out your credit card to buy concert tickets.
Not Smart. It hurts your credit and can lead to debt.
Name two reasons people use credit.
To buy big things (like cars), to handle emergencies, or to build credit history.
What’s one benefit of using a credit card?
You can build credit, earn rewards, or use it for emergencies.
If you pay your credit card bill in full, how much interest do you pay?
None.
Name one thing that can lower your credit score.
Missing payments, using too much credit, opening too many accounts.
Using credit for an emergency car repair.
Smart—as long as you have a plan to pay it back.
What is a lender?
A person or company (like a bank) that gives you credit.
What’s one risk of using a credit card?
Overspending or going into debt.
What does APR stand for?
Annual Percentage Rate (the yearly interest rate).
500
How can teens start building credit?
By using a student or secured credit card and paying on time.
Only paying the minimum balance each month.
Not Smart. You’ll pay more in interest.
What does “credit limit” mean?
The maximum amount of money you can borrow on a credit card.
What is the minimum payment on a credit card?
The smallest amount you must pay each month to avoid late fees.
You borrow $100 and don’t pay it back. Your APR is 20%. How much interest do you owe after one year?
$20.
Who looks at your credit score?
Landlords, banks, car dealers, even some employers.
Using a debit card to learn how to budget before getting a credit card.
Smart! Great way to build good habits first.