Debit & Credit Cards

Debit & Credit Cards

Street Finance

What's happening today...

• Group brainstorming on debit & credit cards

• Case study involving mock credit and bank statements

• Classroom discussion on debit & credit cards: which one would you prefer?

Open Ended

Based on your own knowledge, define what a debit card is.

Open Ended

Based on your own knowledge, define what a credit card is. What do you think are the main differences between a debit card and a credit card?

Example

• 2 May: Jim uses his ANZ credit card to purchase Nike shoes for $100

• 14 May: Jim repays $80 to his ANZ credit card account balance, leaving $20 owing balance

• 31 May: At the end of the month, interest at 10% is charged on the remaining balance of $20 -> $20 x 0.10 = $2

• Jim will now need to pay the interest of $2 plus the closing balance of May of $20, total of $22

• At the end of the next month June, Jim's owing balance will open at $22.

• What if he doesn't repay anything in May?

Video

Dangers of credit card debt

Diligent Credit Card use has its perks!

• Improve credit rating

• Cash back on purchases, sign-up bonuses

• Some purchases made easier; hotel reservations, car holds, etc...

• Credit card awards points can redeem gift cards, airline miles

• Can be safer, avoid losses from fraud

• Improved cashflow, not immediately deducted from bank account

• Insurance and warranties

Case Study

In groups, analyse the credit card and bank statement

Answer a series of questions from Quizizz

Multiple Choice

How much is the minimum payment? What is the minimum payment?

• $20, payment required to avoid paying interest on Alvin’s next period’s payment.

• $900, payment required to avoid paying interest on Alvin’s next period’s payment.

• $20, payment required to avoid paying late fees and interest on Alvin’s next period’s payment.

• $900, payment required to avoid paying late fees and interest on Alvin’s next period’s payment.

Multiple Choice

What is the opening balance?

(select the most correct answer)

• The amount outstanding that is still owed to Streetbank from 31 May

• The amount Alvin Smith still owes to Streetbank from the last statement period

• The amount Streetbank still owes to Alvin Smith from the last statement period

• The amount outstanding that is still owed to Streetbank from 16 May

Multiple Choice

What is the closing balance?

(select the most correct answer)

• The payment to Streetbank needed to earn awards points at the statement end date.

• The payment to Alvin Smith needed to avoid interest charges on the next statement end date.

• The payment to Streetbank needed to avoid interest charges on the next statement end date.

• The payment to Streetbank needed to avoid any extra fees/payments on the next statement end date.

• The payment to Alvin Smith needed to avoid any extra fees/payments on the next statement end date.

Multiple Select

What is the credit limit?

(select ALL correct answers)

• How much Alvin has left to spend on his credit card

• If Alvin goes over this, he may be charged an over-limit fee, or his purchase may be declined

• It is the maximum outstanding balance Alvin Smith can have

• The maximum amount of money that can be lent to Alvin by StreetBank on his credit card account

Fill in the Blank

How much did Alvin pay back on his credit card?

(enter the correct amount)

Fill in the Blank

Which date can you find this reflected on in the Bank Statement?

(enter the correct date eg. "1 Jan")

Fill in the Blank

How much did Alvin spend using his debit card?

(enter the correct amount)

Fill in the Blank

How much did Alvin spend using his credit card?

Fill in the Blank

What is the interest rate on the Streetbank Awards+ Credit Card?

(enter as a percentage eg. "10%")

Open Ended

Building on last week’s budgeting lesson, which expenses do you think Alvin can reduce? Why?

Open Ended

Can you explain how minimum payments benefit the credit card distributor/bank? Are minimum payments costly for the consumer? Why/Why not?

Open Ended

Looking at the formatting of the credit card statement, how does it promote paying the minimum payment?

Open Ended

What do you think the purpose of the awards points are and what kind of spending habits does it promote?

Open Ended

In 2-3 sentences, evaluate Alvin’s spending behaviour.

End of Case Study

Well done!

Open Ended

What are 3 things you found valuable? What are 2 things you think could be improved in the lessson? Any questions you may have still?