LESSON TWO PERSONAL SPENDING INTRODUCTION DEBIT CARD used like cash Linked to a checking or savings account Paying NOW for merchandise PAYPAL online payment service that can be linked to savings checking or credit card account ID: 534803
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Slide1
DEBIT AND CREDIT
LESSON TWO: PERSONAL SPENDINGSlide2
INTRODUCTION
DEBIT CARD
: used like cash. Linked to a checking or savings account. Paying NOW for merchandise
PAYPAL:
online payment service that can be linked to savings, checking or credit card accountSlide3
INTRODUCTION
CREDIT CARD:
provides an instant loan to a consumer from a bank or other financial institution.
money will be repaid with interest if the debt is not paid in full each monthSlide4
INTRODUCTION
CREDIT:
the ability to borrow money
advantages:
Freedom to carry small amounts of cash
Opportunity to establish a good credit history
Ability to track expenditures
Financial flexibility
Credit is not free!Slide5
INTRODUCTION
Credit is not additional income!
A credit card is an extension of your checking account---not an extension of your paycheck
Too much credit card debt can be burdensome and reduce the amount of money available to spend on other items
Can lead to foreclosure on your property and bankruptcySlide6
VOCABULARY
Bankruptcy
Cash
Check
Credit
Credit card
Debit
Debit card
Debt
Foreclosure
PaypalSlide7
ADVANTAGES OF DEBIT AND CREDIT CARDS
Debit card
Credit cardSlide8
QUESTIONS
A DEBIT CARD IS JUST ANOTHER NAME FOR A CREDIT CARD.
FALSE
DEBIT MEANS WITHDRAWAL OR DEDUCTION
TRUE
DEBIT CARD HOLDERS ARE CHARGED INTEREST EACH TIME THEY SWIPE THEIR CARDS
FALSESlide9
QUESTIONS
CREDIT CARDS ARE A BUY-NOW-PAY-NOW PAYMENT OPTION
FALSE
CREDIT CARDS ARE A SAFE WAY TO PAY FOR ONLINE PURCHASES
TRUE
CREDIT CARDS ARE FREE MONEY
FALSESlide10
WHAT HAPPENS IF YOU CAN’T PAY FOR THE THINGS YOU BUY?
Let’s look at a credit card statementSlide11
Cost of Using Credit
Purchase
price of goods
Minimum
monthly payment
Time to pay off debt
Interest paid
True
cost
$1,000
$20
8 years
$863
$1,863
$2,500
$50
23 years
$5,363
$7,863
$5,000
$100
35 years
$12,863
$17,863Slide12
Needs vs. Wants
If you had the money to buy the number one thing on your must-have list, what would you buy?
Is this a need or a want?
Let’s look at the advantages and disadvantages of using a debit cardSlide13
Needs vs. Wants
Now lets look at the advantages and disadvantages of using a credit card
On the credit card statement:
What does Stacie owe on her credit card
Is Stacie charging more than she is paying off
Why might Stacie have $35 in Fees Charged on her bill
What is Stacie’s annual fee for the use of her card?
What will happen to Stacie’s finances over time if she keeps the same spending habits and pays the minimum due?Slide14
VOCABULARY
Annual fee
APR
Credit Limit
Finance Charges
Minimum Payment Due
Previous Balance