Lesson 8: Young People and Credit

9-Week Course

5.3 Young People and Credit Cards

www.ngpf.org

Approximate Time: 45 minutes

5.3 Young People
and Credit Cards

LEARNING OBJECTIVES

Students will be able to:
● Enumerate the differences between debit and credit cards
● Identify at least 3 ways a young adult can gain access to a

credit card, even before they are 21

● Explain why a secured credit card is an excellent way to

build credit

● Read a credit card monthly statement

Open Ended

Do you think it is a good idea for HS students to have a credit card?

What about college students?

Adults?

Tell me why you think this.

RESOURCE 2: CREDIT VS. DEBIT CARDS

Because they’re both rectangular plastic cards used
for purchases, people sometimes confuse credit cards
and debit cards. In reality, they function very
differently. On the next slide, watch the EdPuzzle
video Credit vs. Debit Cards by Bellco Credit Union to
learn more and answer the questions throughout.

Multiple Choice

What happens when you use your debit card?

• You pull money directly from your savings account.

• You pull money directly from your checking account.

• You are borrowing money from your bank to make a purchase.

• You are buying an item/service now with the promise to pay later.

Multiple Select

A key difference between a debit and credit card is…(choose two correct answers)

• You can pay interest when using a credit card, not with a debit card.

• You can pay interest when using your debit card, not a credit card.

• You can build a credit score when using a credit card responsibly, not with a debit card.

• You can build a credit score when using a debit card responsibly, not with a credit card.

Poll

Debit and credit cards work exactly the same way.

• True

• Nah

RESOURCE 3: A QUICK INTRODUCTION TO CREDIT

You’ll likely have a debit card before you get a
credit card, particularly because there are age
and/or income restrictions on credit card access.
On the next slide, scroll to the final section of this
infographic, subtitled “How Can Young People
Get Credit?” and answer the questions.

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Open Ended

If you’re trying to gain access to a credit card before you turn 21, which of the suggestions rely on the support of your parent or guardian?

Open Ended

Not everyone has someone willing or able to cosign for them.

Which of the suggestions do NOT rely on the support of a parent or guardian?

RESOURCE 4: WHAT IS A SECURED CREDIT CARD?

The infographic stated that secured credit cards
are a good option for young adults without a
credit history. But how do these cards work? On
the next slide, watch the video by WalletHub
What Is A Secured Credit Card to learn how.

Open Ended

What are 2 reasons someone might want to open a secured credit card?

RESOURCE 5: HOW TO READ A CREDIT

CARD STATEMENT

If you decide to open your own credit card or tag on
to someone else’s as an authorized user, it’s important
to learn how to read the statement and keep on top
of your monthly bills. On the next slide, watch the
video How to Read Your Credit Card Statement from
Take Charge America, and answer the questions.

Open Ended

What happens if you only make the minimum payment on your credit card statement?

RESOURCE 6: THE FINE PRINT - CREDIT

CARD STATEMENT

It’s time to put your credit card statement
reading skills to the test! On the next slide,
follow the directions on the worksheet and
complete the activity.

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RESOURCE 7: EXIT TICKET

Take the three question Exit Ticket to
assess what you have learned about
young people and credit cards!

Multiple Choice

Which statement is true of both debit AND credit cards?

• Both can trap you in an endless cycle of debt if you’re not careful

• Both allow you to make purchases in a store or online

• Both typically have interest rates between 10-30%

• Both require you to  pay a minimum monthly payment when your bill arrives

Multiple Choice

What is the difference between having a co-signer and becoming an authorized user?

• As a co-signer you are responsible for the bills; as an authorized user you are not

• As a co-signer, you open an account and an adult signs on with you; as an authorized user, you are added to someone’s existing account

• To be a co-signer, both people need to be over 21; to be an authorized user, you can be any age

• With a co-signer, you can open a credit card; as an authorized user, you can open any type of credit account

Multiple Choice

What term describes the amount you must pay in order to be considered “up-to-date” with your credit card payments?

• APR

• Interest rate

• Minimum payment

• Closing balance