Credit Cards

Credit Cards

Open Ended

What do you already know about credit cards?

How do credit cards work?

The credit card company issues you a line of credit. You then purchase stuff and have the choice to pay your balance either in full or make a minimum payment each month.

Watch this video on credit cards for beginners.

https://www.youtube.com/watch?v=w1vmCfW2Udk

Multiple Choice

According to the video, the statement balance is...

• the interest paid

• the amount you owe from your billing cycle

• the APR

• the annual fee

Open Ended

What do you think the advantage is to paying your balance off in full each month?

You won't get charged interest if you pay your balance in full each month!

But what happens if you DON'T pay off your credit card every month? Let's watch a video to find out.

https://www.youtube.com/watch?v=_HfXfKLYV68

Let's Recap

In the video we see that there was a carryover balance of $1000 and then an additional $600 in purchases for that month. After a few calculations we find that even though you only borrowed $1600 you would still have to pay AN ADDITIONAL $18.35 in interest for that month.

So what's the lesson here?

Pay the statement balance on your credit card in full each and every month!