Personal Finance -Credit Unit

Personal Finance Credit Unit

Distance Learning Lessons:

Credit Vocabulary

  1. Intro to Credit
    • Essential Questions:
      • Why do people use credit? 
      • How do the principal, interest rate, and term impact the total cost of a loan? 
      • What are the major types of credit and their key characteristics?
    • Objectives: Students will be able to:
      • Discuss why people borrow
      • Give examples of the acceptable and unacceptable situations to use credit.
      • Explain how borrowing impacts spending power
  2. How Credit Cards Work
    • Essential Questions:
      • ​How do credit cards work?
      • Explain why people can go into debt using credit cards?​
    • Objectives:  Students will be able to:
      • Explain how a credit card works in terms of making purchases and managing payments
      • Read a Schumer box and identify how terms of the card impact total cost of purchases
      • Understand how interest is charged and how to avoid or minimize it
  3. Intro to Credit  (part 2)
    • Essential Questions:
      • Why do people use credit? 
      • How do the principal, interest rate, and term impact the total cost of a loan? 
      • What are the major types of credit and their key characteristics?
    • Objectives: Students will be able to:
      • Explain why a person may need or want credit
      • Identify the major types of credit and their characteristics 
      • Understand the three basic components of lines of credit: principal, interest rate, and term
  4. Young People & Credit Cards
    • Essential Questions:
      • How are debit and credit cards similar and different? 
      • What options do young people have for obtaining a credit card? 
      • How do you read a credit card statement?
    • 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
  5. Loan Fundamentals
    • Essential Questions:
      • How is loan repayment different from credit card repayment? 
      • How does amortization work? And what is an amortization table? 
      • What should you consider before taking out a loan?
    • Objectives: Students will be able to:
      • Differentiate between amortized installment loans and revolving credit lines
      • Read an amortization table and understand how the payments are structured
      • Consider whether taking out a loan is a good or bad idea in a given circumstance
  6. Credit History and Credit Score Presentation Combined
  7. Financial Pitfalls
    • Essential Questions:
      • How do I protect myself from identity theft?
      • What is a payday loan, and how do they cause financial trouble? 
      • How common is debt and what strategies can I use to get out of debt?
    • Objectives: Students will be able to:
      • Take precautions to avoid having their identity stolen
      • Appreciate the dangers of payday lending and identify payday lending laws in their state
      • Develop strategies for eliminating debt should they find themselves accumulating a lot of it

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In the previous presentation: Do Not Use  Your Credit History (Nearpod 6.1 NGPF)

    • Essential Questions:
      • What is a credit report, and why does your credit report matter? 
      • What are the main components of a credit report? 
      • Why should you review your credit report annually, and how do you access it?
    • Objectives: Students will be able to:
      • Enumerate the components of a credit report and how long each data type is retained
      • Understand which people or organizations may review your credit report and why
      • Explain key components of the Fair Credit Reporting Act and how it impacts lenders and borrowers
  2. In previous presentation: Do Not Use  Intro to Credit Scores (Nearpod 6.3 NGPF)
    • Essential Questions:
      • What are the 5 factors taken into account when calculating credit scores? 
      • How can you gain access to your credit score?
      • Under the Equal Credit Opportunity Act, what factors cannot be used to determine creditworthiness?
    • Objectives: Students will be able to:
      • Name the components of a credit score and how they’re calculated
      • Explain the impact of timely payments and low debt on credit score
      • Identify ways of finding out one’s credit score
      • Summarize the rules contained in the Equal Credit Opportunity Act

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  1. Intro to Credit
  2. Credit Costs
  3. Credit Rating
  4. Rights and Responsibilities
  5. Identity Fraud

Vocabulary

Credit Unit Class Notes Template

1. Intro to Credit

Essential Questions:

  • Why do people use credit? 
  • How do the principal, interest rate, and term impact the total cost of a loan? 
  • What are the major types of credit and their key characteristics?

Objectives: Students will be able to:

  • Discuss why people borrow
  • Give examples of acceptable and unacceptable situation to use credit.
  • Explain how borrowing impacts spending power

DO NOW Questions – Intro:

  1. Have you ever borrowed from or lent money to someone?
    1. Who did the loan involve?
    2. What was the agreement for repayment?
    3. Did the agreement work out the way you anticipated?
    4. Were both people satisfied at the end?

**Intro to Credit Presentation**

Activities:

  1. Loan Basics video and worksheet
    – Complete worksheet
  2. ANALYZE: Categorizing Credit Worksheet

Secure vs. unsecured Video 

Assignment: 

News Summary:  2-1 News Story              rubric – Open response

2. Credit Costs

Essential Questions:

  1. How is loan repayment differ from credit card repayment?
  2. How does amortization work?  And what is an amortization table?
  3. What should you consider before taking out a loan?
  4. What do you already know about credit cards?

Objectives:    Students will be able to:

  • Give examples of how credit is used
  • Identify typical costs and terms of credit
  • Calculate the cost of using credit

Credit Unit Booklet

Activities:

  1. Amortization Video:   (NOTES)
    1. When loan payments are amortized, the total amount you owe every month_________.
    2. Why does the amount of INTEREST you pay decreases every month?
    3. What happens to the principal paid over time?
  2. Amortization Exercise
  3. Compound Interest Video  Article
  4. Credit Card Debt Explained Before you decide if opening and using a credit card is the right move for you, you need to understand exactly how they work. Otherwise, you can end up in some serious debt that is hard to dig out of. Watch this video to learn more. Then follow your teacher’s directions to answer the questions either within the EdPuzzle itself . Video: 
  5. Cat Insanity  The previous video illustrated some of the math behind credit card interest and payments and warned about going into debt. But what does it FEEL like to be swimming in overwhelming debt? Play this game to experience a lighthearted version of compounding debt, and then answer these questions. 
  6. Decipher Credit Card Offers With the Schumer Box Because it can be easy to fall into a cycle of debt if you don’t understand the terms of your credit card agreement, Congress passed the Truth in Lending Act (1988) to standardize how credit card information must be presented. Skim the introductory article and then briefly review the Schumer Box provided so you can answer the question.  A visual of the Schumer Box  Question: While ALL the information in a Schumer Box is important, which items do you think matter most on a day-to-day basis?
  7. Preparing you child to make borrowing decisions Video  (NOTES)
    1. The video suggests you consider these 4 things before deciding to take out a loan.  is it  necessary?  Do the monthly payments fit in your budget?  could you save instead of borrow?  Is it worth added interest?

 FAST FACTS…

  • When you apply for a loan, the lender will pull your credit as part of the application process. This is known as a hard inquiry and will usually lower your credit scores by a few points (Credit Karma, 2019).
  • Personal loans make up 1.5% of outstanding consumer debt and just under 5% of outstanding non-mortgage consumer debt (LendingTree, 2019).
  • As of Q3 2018, the Federal Reserve Bank estimated the value of consumer loans, at all commercial banks, to be $1.49 trillion in the United State (SuperMoney, 2019).

Credit Card Grace Period Video

Assignment: 

Challenge 2-1:  DECIDE The Best Credit Card Deal for You.

CALCULATE:  Understand Your Credit Agreement

3. Credit Rating

Essential Questions:

  • What is a credit rating and what is it used for?
  • Why is it important to monitor your credit rating?

Objectives:    Students will be able to:

  • Outline the credit application process.
  • Describe what lenders consider when deciding whether to approve or deny a credit request
  • Explain how creditors investigate someone’;s borrowing habits.

Credit Unit Booklet

Activities:

  1. Applications for Review Packet  pages 4-7   HSFPP-Student-Pack-Lesson-2-3-Credit-Rating_2014
    1. Establish criteria for approving (or denying) a credit application.
    2. Decide whether to approve or deny each application.
  2. What is a good credit score?  website

Assignment: 

Creditworthiness Letter Assignment       Letter template    Letter Rubric

4. Rights and Responsibilities

Essential Questions:

  • What are your legal rights and responsibilities when agreeing to a contract?
  • What are some borrowing guidelines?

Objectives:    Students will be able to:

  • Explain a borrower’s legal rights and responsibilities when agreeing to a contract.
  • Recite guidelines for borrowing limits.
  • State where to get help with credit issues.

Credit Unit Booklet

  1. Shady Sam Loan Game
  2. 2.6 Good and Bad Uses of Credit

Assignment: 

Credit Code of Behavior

5. Identify Fraud

Essential Questions:

  • What are ways to identify fraud?
  • How does identity theft impact an individual?
  • What are ways that you can protect yourself from fraud?

Objectives:    Students will be able to:

  • Give examples of identify fraud
  • Describe how to address problems of fraud.
  • Give examples of ways to protect against fraud.

Credit Unit Booklet

Activities:

  1. Two Videos:  Video 1     Video 2  Secrets of an Identity Thief Video
  2. https://www.identitytheft.gov/  browse the site.
  3. take action 2-5 slide 9

Assignment: 

Identify Theft Assignment

Explain Identity Theft and ways to prevent it.  Create a checklist of at least five actions you will take, starting now, to protect your personal data.

Test Review Materials

Study Guide

Quizlet Study Guide

Kahoot