1. Name of the Credit Card you chose: ________________________________
2. What is the interest rate? ________________________________________
3. Are there fees associated with this card? Circle: Yes No
a. If yes, how much are the fees? _______________________________
4. Why should Kim choose this card? __________________________________________________________________________________________________________________________
5. Kim’s first purchase with the card is a $200.00 TV. Kim has the cash to pay for the TV (about $600.00 in a checking account) but decides to use a credit card to pay for it. Is this a good decision for Kim? Why or why not? ____________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________
6. Could Kim use a debit card to pay for the TV? Circle: Yes No
a. If yes, explain why. _______________________________________________________________________________________________________________________________________________________________________
7. If Kim decides to use a credit card to pay for the TV, what advice would you give Kim about paying the credit card bill? _______________________________________________________________________________________________________________________________________________________________________________________
8. Kim decides to pay $50 per month until the TV is paid for. How long will it take Kim to pay for the TV? ____________
9. How much will Kim have paid in total by the time the TV is paid off? ____________
10. What is the best way for Kim to manage paying for this TV? _______________________________________________________________________________________________________________________________________________________________________________________
Click to download the answer key on page 10.
Bank: A financial institution and business that accepts deposits, makes loans, and handles other financial transactions.
Budget: A plan that outlines what money you expect to earn or receive (your income) and how you will save it or spend it (your expenses) for a given period of time; also called a spending plan. Certificate of Deposit (CD): An account in which you deposit funds for a set term (e.g., six months or one, two, or five years), with a financial institution, with the promise of a set interest rate. For most CDs you cannot make deposits or withdrawals to the account during this term.
Checking Account: An account at a bank (sometimes called a share draft account at a credit union) that allows you to make deposits, pay bills, and make withdrawals. Compound Interest: Interest credited daily, monthly, quarterly, semi-annually, or annually on both principal and preciously credited interest.
Consumer: A person who buys or receives goods or services for personal needs or use and not for resale.
Credit Card Statement: A summary of how you have used your credit card for a billing period. Credit Card: Amount of money a creditor is willing to loan another to purchase goods and services, based the expectation that the money will be repaid as promised with interest.
Credit Limit: A limit set by the credit card company on how much you can charge on the card it issued to you. You can use your credit card to make purchases up to your credit limit. Credit Score: A measure of creditworthiness based on an analysis of the consumer’s financial history, often computed as a numerical score, using the FICO or other scoring systems to analyze the consumer’s credit. A creditor’s evaluation of a person’s willingness and ability to pay debts as judged by character, capacity, and capital; a mathematical model used by lenders to predict the likelihood that bills will be paid as promised. Credit: Amount of money a creditor is willing to loan another to purchase goods and services, based the expectation that the money will be repaid as promised with interest. Debit
Card: A card used to pay for goods and services directly from a checking account by transferring funds electronically from one’s checking account to the store’s account to pay for a purchase; also called check cards. Debt: The entire amount of money owed to lenders.
Direct Deposit: Money electronically sent to your bank account, credit union account, or prepaid card.
Fixed Expenses: Expenses that cost the same amount every time.
Fraud: An illegal act that occurs when people try to trick you out of your personal information and your money.
Gross Income: Total pay before taxes and other deductions are taken out. Income: Any money an individual receives.
Interest Rate: A percentage of a sum borrowed that is charged by a lender or merchant for letting you use its money. A bank or credit union may also pay you an interest rate if you deposit money in certain types of accounts. Interest: Interest is the additional amount you will pay to a lending institution to borrow money. In terms of savings, interest is the additional amount you will earn for having your money in a bank account or other savings vehicle. Investment: Setting aside money for future income, benefit, or profit to meet long-term goal; using savings to earn a financial return.
Loan: Money that needs to be repaid by the borrower, generally with interest.
Opportunity Cost: Cost of the next best use of your money or time when you choose to buy or do one thing rather than another.
Overdraft: An overdraft occurs when you don’t have enough money in your account to cover a transaction, but the bank pays the transaction anyway.
Paycheck: A check for your salary or wages made out to you.
Principal: In the lending context, principal is the amount of money that you originally received from the creditor and agreed to pay back on the loan with interest. In the investment context, it is the amount of money you contribute with the expectation of receiving income.
Salary: Compensation received by an employee for services performed. A salary is a fixed sum paid for a specific period of time worked, such as weekly or monthly.
Sales Tax: A tax on retail products based on a set percentage of the retail price.
Savings Account: An account at a bank (sometimes called a share savings account at a credit union) used to set aside money and that pays you interest.
Taxes: Required payments of money to governments, which use the funds to provide public goods and services for the benefit of the community as a whole.
Wage: Compensation received by employees for services performed. Usually, wages are computed by multiplying an hourly pay rate by the number of hours worked.
Utilize these additional resources to research further information on financial literacy and to identify where we have gathered the information provided throughout this module.
• Bankrate: Credit Card Calculator
• Capital One: Credit Card Calculator
• Consumer Financial Protection Bureau: Analyzing Credit Card Statements
• Consumer Financial Protection Bureau: Financial Terms Glossary
• Consumer Financial Protection Bureau: Getting a Credit Card and Using It Wisely
Click to download the Education Standards on page 14.
Modules 2 and 3
Click here for a printable pdf of MODULE 2: ECONOMIC CHOICES & OPPORTUNITIES
Click here for a printable pdf of MODULE 3: The Role of Banks, Saving for The Future & Financial Planning