Budget Lesson 8: Credit Cards

goal

I can develop skills to compare and evaluate the terms and conditions of various credit cards, the differences between credit cards, and the legal and financial responsibilities involved.

1. Determining the best use of a card as a personal money management device

   ■ Pay bill in full each month and avoid interest charges

   ■ Repay bill over time and pay interest charges

2. Costs and features of credit cards

   ■ Annual Percentage Rate (APR)

   ■ Grace period

   ■ Annual fee

   ■ Late payment fee

   ■ Over-limit fee

   ■ Balancing computation method for finance charge

   ■ Credit limit

   ■ How widely card is accepted

   ■ What services and features are available

​3. Calculating finance charges (APR)

■ Average daily balance

■ Adjusted balance

■ Previous balance

■ Past due balance

■ Examples

4. Comparing the costs and features of credit cards

5. Reading a credit application

■ Interpreting features and costs

■ Examples

6. Before signing

■ Know the details of the contract

■ Ask, if you are not sure

7. Shopping for a credit card

■ Compare costs and features

■ What did you find?

8. What to do if you're denied credit

Multiple Choice

APR measures the interest rate charged by a credit card.

• TRUE

• FALSE

Multiple Choice

The average daily balance method of calculating interest is based on the opening balance of the account for the previous month.

• TRUE

• FALSE

types of credit card accounts

1. Bank card

■ Examples (Visa, MasterCard)

■ for general use

3. Travel and entertainment card

■ Examples (American Express)

■ for specific activities

2. Store card

■ Examples (Macy's, Chevron)

■ for a specific store or company

Multiple Choice

A proprietary credit card is usually accepted by one type of store or company.

• TRUE

• FALSE

​reading a credit card statement

1. What it looks like

2. How to read one

Multiple Choice

If someone uses your lost or stolen credit card, you are liable for no more than $50 if you report it within 2 days.

• TRUE

• FALSE

Drag and Drop

If a billing error occurs on a credit statement, a consumer has ​

Placeholder

days to notify the creditor.

Drag these tiles and drop them in the correct blank above

60

30

90

120

1. Credit cards are loans that charge interest if not paid

in full

2. Fees might be charged for late payments or going

over spending limit

3. Can encourage impulse buying and unnecessary

purchases

4. Need to establish creditworthiness before getting card

disadvantage

1. Ability to obtain needed items

2. Use of card builds credit history

3. Quick source of funds in an emergency

4. No extra charge if bill is paid in full each month

5. Consumer protection

advantage

Advantages and Disadvantages

of credit card use.

Multiple Choice

The annual fee for a credit card is set by the government.

• TRUE

• FALSE

Drag and Drop

A credit card issued through a credit union would be an example of a ​

Placeholder

card.

Drag these tiles and drop them in the correct blank above

bank

travel and entertainment

store

proprietary

Multiple Choice

The grace period refers to the time:

• taken to process a credit card application

• for paying an account without an interest charge

• allowed to notify a creditor of a billing error

• used for calculating interest

Multiple Choice

Comparing the APR among several credit cards allows you to obtain the:

• lowest grace period

• lowest annual fee

• lowest interest rate

• least expensive method of calculating interest

Multiple Choice

A proprietary credit card is usually accepted by one type of store or company.

• TRUE

• FALSE

Multiple Choice

The average daily balance method of calculating interest is based on the opening balance of the account for the previous month.

• TRUE

• FALSE

Multiple Choice

The annual fee for a credit card is set by the government.

• TRUE

• FALSE

Multiple Choice

APR measures the interest rate charged by a credit card.

• TRUE

• FALSE

Multiple Choice

If someone uses your lost or stolen credit card, you are liable for no more than $50.

• TRUE

• FALSE

Drag and Drop

A credit card issued through a credit union would be an example of a ​

Placeholder

card.

Drag these tiles and drop them in the correct blank above

bank

travel and entertainment

store

proprietary

Multiple Choice

The grace period refers to the time:

• taken to process a credit card application

• for paying an account without an interest charge

• allowed to notify a creditor of a billing error

• used for calculating interest

Multiple Choice

Comparing the APR among several credit cards allows you to obtain the:

• lowest grace period

• lowest annual fee

• lowest interest rate

• least expensive method of calculating interest

Drag and Drop

If a billing error occurs on a credit statement, a consumer has ​

Placeholder

days to notify the creditor.

Drag these tiles and drop them in the correct blank above

60

30

90

120