Understanding Credit Cards MIDDLE AND HIGH SCHOOL


There are more than 576 million credit cards in circulation in the United States. That’s the equivalent of every man, woman, and child (even babies) in the country having almost two credit cards each!


Chances are that you have seen a credit card advertisement in the mail, on TV, or online. Maybe you were asked to sign up for a store reward card (“sign up today and get 15% off your purchase”).


For many people having a credit card is a helpful asset. It helps them build credit,


gives them an opportunity to plan spending, and may be more convenient. In many cases, it has additional perks such as earning airline or hotel miles.


However, like any financial tool, if the credit card amount due is not paid in a timely fashion, it can have a detrimental effect on your financial plan. So, before you decide to get a credit card, it is important to understand the cost of obtaining the card including interest rates and payment periods. Be sure to read the fine print and understand the charges and provisions. Source: Nilson Report, February 2010


Directions. Over the next couple of weeks, ask an adult at home if you can collect the credit card offers sent to your house. Review each one and complete the chart to compare the offers. If this is not an option, conduct an online search to find credit card offers.


Name of Company


1. 2. 3.


What are the advantages and disadvantages of each offer? Does one offer stand out from the others? If you wanted a credit card, which would you choose? Why? Free information on credit cards is available at www.creditcards.com.


Beyond Daily Expenses: Saving, Investing, and Sharing


The money available after you pay your daily expenses, or your needs, is called discretionary income. There are several ways that you can allocate this money. Three major categories are savings, investing, and sharing.


Saving


Ben Franklin often is quoted as saying, “A penny saved is a penny earned,” meaning that it’s important to save your money. When money is managed strategically towards your future, it is a tool that can help you reach your goals. It is a way to work toward acquiring large purchases (big trip, school, house, car), financial security in the event of an emergency (injuries, job loss, accidents), or even funds for retirement.


When deciding where you want to place your money, consider how quickly you will want access to it (liquidity), and how much you want to be paid for letting the bank or other institution hold it (interest rate). For example, if you are in an accident, you might need the money relatively quickly (liquidity is more important than a higher interest rate). On the other hand, a retirement savings plan is something that you know you will not need for several years (higher interest rate is more important to you than liquidity).


The more liquidity you want, the lower interest rate you generally get. Rule of thumb: 11 Investing


In finance, an investment is when you choose to use your funds to buy a financial item or other product


with the expectation of a profit. While this option provides you with the opportunity to make money, it is riskier than saving.


Investments take many different forms: securities (stocks, bonds, CDs), property, or a local business. You can invest in yourself by obtaining more schooling or starting your own business.


Sharing


Charity is helping others by sharing your time, your talents, and/or your money with other people. Is there something charitable that you really would like to support, such as protecting animals, helping elderly people, or building parks and playgrounds? Is there an organization or group that makes your community better – for example, local sports teams, community centers, or firefighters? You may decide to donate some portion of your time, talent, or money to charitable organizations.


Initial Yearly Fees Penalty


Interest Rate on Unpaid Balance


Perks (airline miles, hotel points, etc.)


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