Personal Finance 0-1

Personal finance

I–III Bach
Mr. Carlos Vega​
Date:

​What is a credit?

8h07
Forum
https://classroom.google.com/c/NjU2NDA5Mzk5ODc0/sa/Njc1NTA0OTIxNzUy/details

• The ability to borrow money and pay it back later.

• What is credit?

Open Ended

Which do you think are the benefits of using credits?

Open Ended

Which do you think are the bad aspects of using credits?

• Building a Credit History: On-time payments establish a positive credit history, leading to better loan terms and interest rates in the future (e.g., mortgages, car loans).

• Convenience and Security: Credit cards offer secure transactions, rewards programs, and purchase protection.

The Power of Credit (Positive)

• Debt Trap: Minimum payments can trap you in a cycle of high-interest debt.

• Overspending: Easy access to credit can lead to impulse purchases and exceeding your budget.

• Negative Credit History: Late payments damage your credit score, making borrowing more expensive.

The Perils of Credit (Negative)

Open Ended

Case Study (Group Activity - 5 minutes)
Scenario: Sarah (25 years old) just graduated and got a credit card with a $5,000 limit. She enjoys traveling and sees a weekend getaway advertised for $2,000. Sarah only has $500 saved.

Discuss and write down the pros and cons of Sarah using her credit card for the trip.

Credit is a tool, not a replacement for a budget. Only spend what you can afford to repay.

​​Live Below Your Means

​Aim to keep your credit card balance below 30% of the limit.

​​Credit Utilization Ratio

​Set up automatic payments to avoid late fees and interest charges.

​​Pay on Time, Every Time

Regularly check your credit report for errors and fraudulent activity.

​​Monitor Your Credit Report

​Building a Healthy Credit Strategy

• Annual Fees: Consider cards with no annual fees if you rarely carry a balance.

• Interest Rates: Choose a card with a low introductory and ongoing APR (Annual Percentage Rate).

• Rewards Programs: Select a card with rewards that align with your spending habits (e.g., cashback, travel points).

Credit Card Comparison & Selection