Tài liệu Taking Control of Your Credit Teacher’s Guide docx

To help with overall lesson planning, the following content standards and per-formance expectations are related to the resources in this Teacher’s Guide: Personal Finance PF 1.1.5 Create

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Lesson Plan Organization

The lessons in this Teacher’s Guide provide teachers with all the information necessary to

effectively teach the concepts presented in and related to the PBS39 Video Field Trip, Taking

Control of Your Credit Each lesson clearly outlines every category of instructional elements

to help teachers quickly assess the purpose and strategy of the lesson

Video Field Trip Connection

This section identifies the chapter marker(s) on the Taking Control of Your Credit DVD

corre-sponding to the concepts targeted for the lesson

Key Concepts

This section lists the concepts introduced in the Taking Control of Your Credit Video Field Trip

DVD chapters identified in the Video Field Trip Connection section Key concepts are bered based on the lesson number and order of concepts For example, Key Concept 1.2 is the second concept in Lesson 1

num-Additional Concepts

This section lists concepts not directly discussed in the Taking Control of Your Credit Video

Field Trip DVD but related to its content The additional concepts are included to enhance the

coverage of the Taking Control of Your Credit Video Field Trip DVD Additional concepts are

numbered based on the lesson number and order of concepts (including Key Concepts) For example, Additional Concept 2.10 is the tenth concept in Lesson 2

Content Standards and Performance Expectations

This section identifies the Indiana content standards and performance expectations ated with the Key Concepts and Additional Concepts for each lesson These standards and expectations outline the specific learning goals for students who complete the lesson The standards are identified by the codes designated in the Indiana Academic Standards by the Indiana Department of Education

associ-Vocabulary

This section lists relevant vocabulary terms associated with the Key Concepts and Additional Concepts for each lesson How the suggested instructional strategies teach the vocabulary terms vary across lessons Some lessons include explicit strategies while others recommend the teacher’s own methods

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infor-Content Standards and

Performance Expectations

The resources in this Teacher’s Guide are designed to correspond to the Indiana content standards and performance expectations Each lesson lists the specific standards associated with its topics To help with overall lesson planning, the following content standards and per-formance expectations are related to the resources in this Teacher’s Guide:

Personal Finance

PF 1.1.5 Create and analyze a personal balance sheet

PF 1.1.7 Develop financial goals for the future and a financial plan based on one’s lifestyle,

expectations skills, and career choices

PF 1.1.10 Identify various traditional and technology resources available for obtaining

financial information

PF 1.2.5 Distinguish between simple and compound interest

PF 3.3.1 Develop and modify a personal budget for income, saving, and fixed, variable and

discretionary expenses

PF 3.3.2 Compare and contrast disposable and discretionary income

PF 3.3.3 Discuss the importance of the concept of “paying yourself first” in relationship to

saving for meeting one’s financial goals

PF 3.3.5 Analyze alternative actions for dealing with financial difficulties, such as credit

overextension, loss of job, and disability

PF 3.6.3 Evaluate the advantages and disadvantages of electronic banking such as direct

deposit, debit cards, ATM, and online banking

PF 3.6.4 Analyze privacy and security issues associated with financial transactions,

endorsements and electronic banking

PF 4.1.2 Analyze impulse purchasing and how marketers employ techniques to stimulate

PF 4.3.1 Analyze sources and types of credit

PF 4.3.2 Analyze credit components such as principal, interest, payment periods, grace

periods, credit limits, incentive buying, fees, and minimum payments

PF 4.3.3 Analyze credit marketing techniques, features and pitfalls

PF 4.3.4 Create a plan for repaying debt

PF 4.3.5 Select an appropriate form of credit for a particular buying decision

PF 4.3.7 Explain the impact of credit reporting, the 5C’s of credit scoring, and FICO

scoring on consumer’s credit worthiness

PF 4.3.8 Evaluate the current laws involving consumer rights and responsibilities

PF 4.5.1 Evaluate the effects of living beyond one’s means

PF 4.5.2 Analyze the various alternatives to resolving credit problems

PF 4.5.4 Explain identity theft and its potential impact

PF 5.1.1 Use clear and legible handwriting in all written work and communication

PF 5.1.2 Demonstrate active listening skills

PF 5.1.3 Use discussion skills to assume leadership and participant roles

PF 5.1.4 Use research, composition, and oral skills to present information for a variety

of situations utilizing appropriate technology

PF 5.1.5 Work cooperatively with peers and authority figures

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PF 5.1.6 Use clear and concise writing skills to describe, explain, and inform various

E.1.2 Explain how consumers and producers confront the condition of scarcity, by

making choices which involve opportunity costs and tradeoffs

E.1.4 Describe how people respond predictably to positive and negative incentivesE.1.5 Predict how interest rates will act as an incentive for savers and borrowersE.1.11 Formulate a savings or financial investment plan for a future goal

E.6.1 Explain the basic functions of money

E.6.5 Compare and contrast credit, savings, and investment services available to the

consumer from financial institutions

E.6.8 Formulate a credit plan for purchasing a major item comparing different

interest rates

Consumer Economics

CE.1.1 Demonstrate components of critical thinking, creative thinking, and reasoningCE.1.4 Apply management, decision-making, and problem solving processes to

accomplish tasks and fulfill responsibilities

CE.2.4 Examine interrelationships of standards, wants, needs, goals, and consumer

satisfaction

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Pre-Test and Post-Test

To assess students’ overall level of learning from the Video Field Trip, Taking Control of Your

Credit, it is recommended to administer and post-tests to students Results from the

pre-test can also guide the teaching strategies and concepts to emphasize based on the lessons included in this Teacher’s Guide

Prior to watching the Taking Control of Your Credit Video Field Trip DVD or introducing any

related concepts, have students complete the following pre-test The pre-test includes ten true/false and multiple-choice questions The pre-test and pre-test answer key are included For immediate feedback in the classroom, have students exchange their test with another student after everyone has completed the pre-test Review the answers to each question of the pre-test and have the students grade one another’s tests Have students return the pre-tests so each student can review their understanding Collect the pre-tests to assess students’ understanding of the main concepts

After watching the Taking Control of Your Credit Video Field Trip DVD and completing the

accompanying lessons in this Teacher’s Guide, have students take the following post-test The post-test is identical to the pre-test, with ten true/false and multiple-choice questions The post-test and post-test answer key is included

As with the pre-test, have students exchange their test with another student after everyone has completed the post-test Review the answers to each question of the post-test and have the students grade one another’s tests Have students return the post-tests so each student can review their understanding Collect the post-tests to assess students’ understanding of the

main concepts taught using the Taking Control of Your Credit Video Field Trip DVD.

The included pre-test, post-test, and answer keys serve only as templates and can be fied by teachers to tailor the material to their teaching strategies

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Name:

What Do You Know about Credit?

For questions 1-5, indicate whether the given statement is true or false.

1 A credit card is the same as a debit card.

4 Some employers or schools may review a person’s credit report and deny

employment or acceptance to people with bad credit histories.

TRUE / FALSE

5 The grace period on a credit card is the time period between when you receive your credit card bill and when you have to pay it.

TRUE / FALSE

For questions 6-10, choose the alternative that best answers the question.

6 To keep your credit card interest payments as low as possible,

a pay the minimum monthly payment

b try to pay off your credit card bill in full every month

c pay off your credit card bill only after saving enough money to

pay it in full, no matter how long it takes

d switch to a different credit card that has a higher interest rate

7 It is generally recommended that the proportion of your net income used for credit payments not exceed:

a 50%

b 30%

c 20%

d 5%

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8 According to a 2007 survey by the New Hampshire Higher Education Assistance Foundation, the percentage of college freshmen who are at least four months behind on their credit card payments is:

a 7%

b 21%

c 38%

d 70%

9 To help prevent the abuse of credit usage, a smart consumer will:

a compare needs versus wants

b usually only use credit to buy expensive, long-lasting goods

c save money to plan for emergencies and future spending

d all the above

10 Someone with significant credit problems due to overusing credit cards should contact the:

a Better Business Bureau (BBB)

b Internal Revenue Service (IRS)

c Consumer Credit Counseling Service (CCCS)

d Securities and Exchange Commission (SEC)

d 5%

8 According to a 2007 survey by the New Hampshire Higher Education Assistance Foundation, the percentage of college freshmen who are at least four months behind on their credit card payments is:

a 7%

b 21%

c 38%

d 70%

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Pre-Test Answer Key

TRUE

FALSE

b try to pay off your credit card bill in full every month

c pay off your credit card bill only after saving enough money to pay it in full, no matter how long it takes

7 It is generally recommended that the proportion of your net income used for credit payments not exceed:

a 50%

b 30%

c 20%

d 5%

8 According to a 2007 survey by the New Hampshire Higher Education

Assistance Foundation, the percentage of college freshmen who are at least

four months behind on their credit card payments is:

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d all the above

c Consumer Credit Counseling Service (CCCS)

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Name:

For questions 1-5, indicate whether the given statement is true or false.

For questions 6-10, choose the alternative that best answers the question.

6 To keep your credit card interest payments as low as possible

b try to pay off your credit card bill in full every month

7 It is generally recommended that the proportion of your net income used for

credit payments not exceed

a 50%

b 30%

c 20%

d 5%

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8 According to a 2007 survey by the New Hampshire Higher Education Assistance Foundation, the percentage of college freshmen who are at least four months behind

on their credit card payments is:

a 7%

b 21%

c 38%

d 70%

9 To help prevent the abuse of credit usage, a smart consumer will

a compare needs versus wants:

d all the above

c Consumer Credit Counseling Service (CCCS)

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Post-Test Answer Key

TRUE

FALSE

b try to pay off your credit card bill in full every month

7 It is generally recommended that the proportion of your net income used for

credit payments not exceed:

a 50%

b 30%

c 20%

d 5%

8 According to a 2007 survey by the New Hampshire Higher Education

Assistance Foundation, the percentage of college freshmen who are at least

four months behind on their credit card payments is:

a 7%

b 21%

c 38%

d 70%

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9 To help prevent the abuse of credit usage, a smart consumer will:

d all the above

10 Someone with significant credit problems due to overusing credit cards should contact the

c Consumer Credit Counseling Service (CCCS)

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Lesson 1: What is Credit?

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1.6 Charge card versus credit card

1.7 Checking accounts and savings accounts

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ATM card — card that allows withdrawals and deposits from bank accounts using an

automatic teller machine (ATM) and functions as a debit card requiring a personal tification number for transactions.

iden-Borrower — a person or institution that obtains money from a lender with the

obligation to repay the money loaned

Car loan — credit issued by a financial institution for the express purpose of

purchasing a vehicle.

Charge card — card that allows purchase but the charged payment must be paid upon

receipt of the billing statement.

Check — written document that serves as money by drawing on deposits at a financial

institution.

Checking account — account at a financial institution that allows an individual to

deposit money into that account, which can be accessed on demand.

Credit — trust in a buyer’s ability and intention to pay in the future.

Credit card — card that acts as a means of exchange like money by authorizing

payment for goods and services based on the buyer’s ability and intention to repay the lender.

Debit — a payment charged to an individual or institution.

Debit card — card that allows purchases by directly deducting the payment from the

buyer’s personal bank account, typically a checking account.

Lender — a person or institution that grants access to money conditioned on the

loaned money being returned with interest for its temporary use.

Loan — credit agreement between a lender and borrower.

Mortgage — a lien upon real estate given to secure credit.

Revolving credit — credit automatically renewed as credit payments are made Savings account — account at a financial institution that allows an individual to

deposit money into that account, which may or may not be accessed on demand and

is typically used as a means of holding money reserves.

SMART card — card that has a micro processing chip embedded with relevant data

that allows the user to perform specific actions, such as purchasing goods and

services like a credit card.

Student loan — credit issued by the government or a financial institution for the

express purpose of purchasing education services.

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In the Taking Control of Your Credit Video Field Trip DVD, Julian and her friend learn

what credit is and why it is used, as well as about different types of credit This lesson informs students about credit and its use by examining different methods of payment and types of credit Students are engaged by exploring personal spending patterns and credit usage The lesson strengthens student’s communication and critical thinking skills through classroom activities and personal exercises.

Procedures

1 Watch the Taking Control of Your Credit Video Field Trip DVD (at least

chapters 1 and 2).

2 Ask students for their reactions to the DVD Encourage any responses without

trying to initially steer the direction of the discussion.

3 Introduce information about teen spending and credit card use using the Facts about

Teen Spending sheet Highlight the substantial spending by teens, the alarming misuse

of credit cards by college students, and the widespread use of credit cards among the entire population.

4 Review the vocabulary as appropriate to ensure students clearly understand the

concepts being discussed.

5 As an in-class exercise to engage students at a personal level, use Activity 1

savings accounts, and use of credit Expand on the survey questions to stimulate dents’ personal reflection about these issues.

stu-6 Distribute Exercise 1 Family Credit Survey to students Explain that this exercise asks students to investigate how goods found at home are purchased, the usage of credit by the family, and the types of credit used After completing the survey with their parents, students must write a short assessment of their family’s credit usage.

7 Lesson 2 explores where to get credit, as well as credit card marketing.

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Teacher observation of classroom participation

Rubric for Exercise 1

Additional Resources

http://www.careprogram.us

http://careprogram.squarespace.com/statistics/

“Clothed, Fed and Over Their Heads?”

New Hampshire Higher Education Assistance Foundation

(http://www.nhheaf.org/creditanalysis.asp)

“Credit for Beginners,” a lesson from the

National Council on Economic Education

How Interest Can Work For You and How Interest Can Work Against You!,

Harlan Day, Indiana Council for Economic Education, 2008

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Facts about Teen Spending

Trends in Teen Spending1

• $179 billion: amount spent by teens aged 12-17 on goods and services in 2006

• $107: average amount of money that teens spend per week

• 29%: percent of teens spending more than $100 per week

• 60%: percent of teens that receive money from their parents as a source of income

• 45%: percent of teens earning money from odd jobs or part-time jobs

• 56%: percent of teens having a savings account

• 10%: percent of teens having a checking account

• 7%: percent of teens having access to a parent’s credit card

• 18%: percent of teens wanting to get a credit card in their own name

• 33%: percent of older teens aged 18-19 having a credit card in their own name

• 200,000: number of bankruptcy cases filed by young adults aged 18-25 in 20062

• 60%: percent of students saying they never had a meaningful conservation

about personal finances with their parents2

Credit Card Use among College Students in 20073

• $3,106: average credit card debt

• $7,937: average credit limit

• 5.96: average number of credit cards

• 1.98: average number of credit cards actively in use at the time of the survey

• 42%: percent with six or more credit cards

• $1,200: average credit card debt for students with two credit cards

• $4,830: average credit card debt for students with six or more credit cards

• 28%: percent of freshmen with more than $3,000 in credit card debt

• 51%: percent of freshmen delinquent on their credit card payments

• Up to 10%: percentage of college students who will drop out due to

credit card problems2

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Credit Card Use among the US population

• $3,238: average credit card debt4

• 4: average number of credit cards5

• 14%: percent of persons with more than 10 credit cards5

Sources:

1 — ”Targeting Teens,” Teenage Research Unlimited, 2007

2 —”Can You Believe This?” CARE Program

(http://careprogram.squarespace.com/free-care-downloads/handouts/Can%20You%2 0Believe%20This%20Handout%20new%20logo.pdf)

3 — ”Clothed, Fed and Over Their Heads,” New Hampshire Higher Education

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Activity 1 Classroom Survey

Survey students in your classroom about their usage of checking accounts, savings accounts, and credit Compile the numerical results for each question on the board and discuss the findings with the students.

1 How many students work an odd job or part-time job to earn some income?

Count Percent of Class

(Count/Number of Students)x100

2 How many students receive an allowance or other money from parents?

3 How many students spend at least $20 per week to buy various goods and

services?

4 Who has their own checking account?

5 Who has their own savings account?

6 Who uses an ATM or debit card, either their own or their parents?

7 Who has their own credit card?

8 Who uses a credit card, either their own or their parents?

9 Who has borrowed money through any type of loan to buy something?

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Exercise 1 Family Credit Survey

Ask your parents the following questions about how they purchased goods at your home and the types of credit they have used Record their answers in the space provided.

1 How many credit cards does the family have, including gas and store credit cards?

2 How often are credit cards usually used to buy things?

3 List all the types of loans the family has ever had (mortgage, car loan,

student loan, etc.)

4 Check the appropriate box in the table below to indicate how common items at a

home are purchased Note that some answers can be a combination of credit and other methods If you do not have a listed item at your home, skip to the next item.

5 If applicable, ask your parents why they chose to use credit to buy some of the

items listed above.

Based on your own opinion, write a paragraph assessing your family’s use of credit to make purchases, including the various types of credit used.

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Rubric for Exercise 1

Name

Performance Indicator 0 1 2 3 4

Student demonstrated understanding of ways to

purchase goods and services, including differences

between debit and credit

Student demonstrated understanding of different

types of credit and their sources

Student effectively used critical thinking skills to

analyze the use of credit and their family

Student appropriately used technical terminology

Student used clear and concise writing skills

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Lesson 2: Finding Credit

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2.2 Institutions offering credit

2.3 Credit card marketing techniques

2.4 Choosing a credit card

2.10 Resources for obtaining financial information

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Bank — a licensed, for-profit institution that provides financial services.

Benefit — monetary or non-monetary gain

Cost — monetary or non-monetary loss incurred

Cost-benefit analysis — a decision-making process based on comparing the costs

and benefits of alternatives and choosing the option with the highest net benefit.

Credit union — a cooperative institution that functions like a bank to provide financial

services to its members who own the union.

Disincentive — something that motivates a person not to take an action.

Financial institution — an organization, such as a bank, credit union, pension fund,

and insurance company, that provides financial services and acts as an intermediary in transactions in financial markets.

Gas card — credit card used for purchases at gasoline retailers and typically issued

by a gasoline company.

Impulse buying — unplanned or spontaneous buying not based on rational decision

making that tries to create instant self gratification.

Incentive — something that motivates a person to take an action.

Marketing — the promotion and advertising of a product or service

Net benefit — Difference between benefits and costs.

Store credit card — credit card issued by a retail store, typically for purchases at that

store.

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In the Taking Control of Your Credit Video Field Trip DVD, Julian and her friend learn that

getting credit – especially credit cards – can be easier that they thought They also discover that gimmicks are often used to entice people to sign up for credit cards, which can lead to overusing and overspending with credit cards This lesson informs students about where to commonly get access to credit, frequent marketing tactics related to credit cards, and how to comparison shop for credit cards Through this lesson, students apply cost-benefit analysis

and develop communication and critical thinking skills through classroom activities and

per-sonal exercises

Procedures

1 Watch the Taking Control of Your Credit Video Field Trip DVD (at least chapters 1 and 2).

2 Review vocabulary as appropriate throughout the lesson to ensure students clearly stand the concepts being discussed

under-3 Ask students where they think credit cards come from Write all responses on the board

4 Discuss the most common sources of credit cards: financial institutions, gas companies, and retail stores Among financial institutions, banks and credit unions are the most frequent sources of credit cards Gas companies typically offer their own credit cards to encourage customers to buy their gasoline Retail stores are increasingly offering credit cards to entice customers to buy more at their stores Stores issuing credit cards range from traditional de-partment stores like Macy’s to discount stores like Wal-Mart to specialty stores such as Best Buy

5 Ask students how they think people get credit cards and how easy they think it is to get a credit card Have them think about the sources of credit cards and the procedures to apply for credit Discuss the importance of applying for credit Companies issuing credit cards use the personal information provided in an application to evaluate the likelihood that a person can pay their credit purchases Most applications ask about age, job history, and income level Highlight the fact that no one under the age of 18 is legally allowed to have a credit card in their own name only Teenagers younger than 18 are required to have a co-signer on a credit card

account Use Activity 2.1 Sample Application Form to show students a common credit card

application Discuss the types of questions and how to respond to them

6 Ask students why companies and stores advertise heavily for credit cards Discuss the two main goals of marketing: 1 to increase consumer awareness about products and 2 to increase sales of those products Advertising credit cards can enhance a company’s general marketing strategies First, getting a consumer to obtain the company’s credit card can create

a stronger tie between the consumer and the company, potentially over a long time period Second, sales made using credit can generate additional revenues for a company since many credit users incur interest payments in addition to the original purchase amount For example, many stores offer credit cards to customers at the checkout counter with special discounts for signing up and using the new card This technique encourages impulse buying

7 Ask students how credit cards are advertised Highlight the use of mailings, television mercials, print ads in magazines and newspapers, and direct contact, such as a store clerk soliciting a customer at the checkout counter

com-8. The use of incentives is a popular technique to entice people to sign up for credit cards cuss how incentives and disincentives influence consumer behavior Ask students what types

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Dis-of credit card incentives they remember seeing Pre-approval, rebates, reward programs, free merchandise, special introductory discounts, and lower prices are frequently used incentives

9 Teens and college students are targeted heavily to entice young people to begin using credit early in their lives Companies have an incentive to develop stronger long-term ties with potential customers and to encourage current and future sales A growing trend – and major concern – is the prevalence of credit card companies advertising on college campuses, espe-cially at the beginning of a new school year According to a 2003 survey of college students in Oklahoma, 58% indicated that pre-approval influenced their decision moderately or a lot, while 32.5% said other incentives mattered Gimmicks like free food, free t-shirts, games, and en-tertainment can entice students to impulsively sign up for a credit card, or even multiple cards

To reduce or eliminate unsolicited credit card mailings, individuals can request to be removed

from credit card mailing lists by going to the following website for more information: http://www.

transunion.com/corporate/personal/consumerSupport/help/mailerOptOut.page.

10 To have students recognize these marketing efforts at a personal level, distribute Exercise

2.1, How Exposed Are You? to students Explain that this exercise asks students to record

their exposure to credit card advertising during a one-week period Students must identify any incentives offered with the advertised credit cards and explain if each incentive would influ-ence them

11 Because of the prevalence of credit card marketing, students need to understand that all credit cards are not the same and how to evaluate their differences Selecting the right credit card is important Cost-benefit analysis provides an effective decision-making process

to compare credit cards and choose the right one for each person Discuss types of costs and benefits associated with credit cards Costs can include interest rates to be paid, any fees for having or using the credit card, and lower future disposable income due to paying off credit bills Benefits can include establishing a credit history, being able to buy something now instead of waiting, being able to buy online, and perks like lower prices, rebates, and other incentives (The costs and benefits associated with credit cards are discussed in more detail in Lesson 3.) To apply cost-benefit analysis, the costs and benefits of each alternative should be compared, and the net benefit determined A decision is made by choosing the alternative with the highest net benefit Make students understand that costs and benefits may be perceived differently by different people

12 Distribute Exercise 2.2 Choosing a Credit Card to students Explain that this exercise

asks students to use cost-benefit analysis to select the best credit card for them Students will compare the costs and benefits of a set of different credit cards described online After weigh-ing the costs and benefits, students will choose the credit card they prefer Students must iden-tify the costs and benefits associated with each credit card and write a summary describing their choice and their use of cost-benefit analysis in making their decision

13 Lesson 3 explores the pros and cons of using credit cards

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Rubric for Exercise 2.1

Rubric for Exercise 2.2

Additional Resources

The Campus Credit Card Trap: A Survey of College Students and

Credit Card Marketing

U.S Public Interest Research Group, 2008

corporate-accountability/business-practices-amp-corporate-accountability/the- campus-credit-card-trap)

Kathy Kristof, Los Angeles Times, March 28, 2008

(http://www.latimes.com/business/la-fi-college28mar28,1,5364760.story)

The Credit Card Mystery, a lesson from the

(http://www.econedlink.org/lessons/index.cfm?lesson=EM28&page=teacher)

http://www.jumpstart.org

Learning, Earning and Investing

National Council on Economic Education, 2004

http://www.mymoney.gov/credit.shtml

http://nefe.org (National Endowment for Financial Education)

http://www.youngmoney.com/credit_debt/

Oklahoma College Student Credit Card Study,

Center for the Student Affairs Research, Oklahoma State University, 2003

Store Credit Cards: Flashy Perks, High Rates

Lucy Lazarony

(http://moneycentral.msn.com/content/Banking/creditcardsmarts/P55860.asp)

Teacher’s Guide: How Interest Can Work For You and

How Interest Can Work Against You!

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Activity 2.1 Sample Credit Card Application

Please tell us about yourself.

First Name MI Last Name

Social Security Number: - -

Date of Birth (MM/DD/YYYY): / /

Home Phone Number: ( )

Work Phone Number: ( )

What is your occupation?

How many bank accounts do you have?

Do you rent or own your home?

Monthly rent/mortgage payment $

What is your total household income* per year? $

*Include all income received in the household that you want considered as a basis for repaying credit debt Any maintenance income, such as alimony or child support, does not have to be included if you do not want it considered.

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Exercise 2.1 How Exposed Are You?

Part I Credit card advertisements are everywhere In the table below, document your

exposure to credit card advertisements during a one-week period Each day record the number by type of marketing technique.

Mailing* CommercialTV MagazineAd NewspaperAd PhoneCall* SolicitationIn-store Other

* Include mailings and phone calls received by any member of your family.

Part II Compute the number of credit cards recorded in Part I for each type of

credit-granting institution For example, record the number of cards offered by retail stores.(financial, retail store, gas company, other).

FinancialInstitutions StoresRetail CompaniesGasoline OtherNumber

Part III Describe every incentive offered in the credit card advertisements you

en-countered during this one-week period and whether the incentive would influence you (Some advertisements may not specify incentives If none of the advertisements recorded above included incentives, indicate so and describe two hypothetical incentives that would influence you.)

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Exercise 2.2 Choosing a Credit Card

In this exercise you will evaluate five different credit cards and hypothetically choose the best one for you Use cost-benefit analysis to make your decision by comparing the costs and benefits of the different credit cards Go to www.cardtrak.com/cards/catego- ries/student.html to see a set of possible credit cards Select any five cards to evaluate from the list shown Click on each card you select to review information about the credit card to help you evaluate its potential costs and benefits to you.

Part I Record the name of the credit card and the costs and benefits you perceive for

each alternative

Part II. Estimate the net benefit of each card and select the best card for you Write a summary of your decision based on cost-benefit analysis, describing what made your selected card the best choice.

Credit Card Alternatives Costs Benefits

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Rubric for Exercise 2.1

Student demonstrated understanding of incentives

and their effect on consumer behavior

choose an appropriate credit card

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Rubric for Exercise 2.2

Name

Performance Indicator 0 1 2 3 4

Student demonstrated effective use of an online

resource for obtaining financial information

Student demonstrated understanding of institutions

offering credit

Student demonstrated understanding of cost-benefit

analysis

choose an appropriate credit card

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Lesson 3:

Pros & Cons of

Credit Cards

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Chapter 2

Chapter 6

Key Concepts

3.1 Benefits of credit cards

3.2 Costs of credit cards

3.3 Simple versus compound interest

3.4 Security issues, including identity theft, associated with credit cards

Additional Concepts

3.5 Components of credit

3.6 Sources of financial information

3.7 Cost-benefit analysis of using credit cards

3.8 Effect of living beyond one’s means

3.9 Influence of incentives and disincentives on consumer behavior

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credit card number or Social Security number.

Interest — money paid by borrowers to lenders for the use of the borrowed money; a

cost of borrowing.

Interest rate — the percentage of the money borrowed that must be paid by borrowers

to lenders for the use of the borrowed money; the price of borrowing.

Principal — the amount of money originally borrowed or lent, ignoring any interest Simple interest — interest calculated on the principal only.

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In the Taking Control of Your Credit Video Field Trip DVD, Julian and her friend learn there

are good and bad points of having a credit card This lesson explores the pros and cons of credit cards Students learn to identify costs and benefits associated with credit cards using cost-benefit analysis, discover the impact of compound interest, and examine identity theft and other financial security issues Through this lesson, students increase communication and critical thinking skills through classroom activities and personal exercises

Procedures

1 Watch the Taking Control of Your Credit Video Field Trip DVD (at least chapter 2; chapter 6

includes related material)

2 Review vocabulary as appropriate throughout the lesson to ensure students clearly stand the concepts being discussed

under-3 Ask students if credit cards are always a bad choice If so, why? If not, why not? Encourage any responses without trying to initially steer the direction of the discussion

4 Recall the basic economic premise that every choice has both costs and benefits ated with it Methods of paying for something are no different Using a credit card to buy some-thing imposes costs and benefits on a consumer

associ-5 Use the Costs of Credit Cards Sheet to discuss negative effects caused by using credit

cards Emphasize that the magnitude of the costs of credit depend on how responsibly credit

is used Additional information can be found on the Real Cost of Credit handout available from

the CARE Program site:

(http://careprogram.squarespace.com/free-care-downloads/hand-outs)

6 Highlight the fact that credit card payments are calculated using compound interest and not simple interest The more time it takes to pay off a credit card, the longer the interest payment has to compound Therefore, the quicker a credit card balance is paid off the less interest would otherwise be paid This suggests that interest costs can be reduced by paying more than the minimum monthly payment and by lowering the interest rate associated with a credit card

7 Distribute Exercise 3.1 Cost of Compound Interest to students Explain that this exercise

asks students to compare interest payments and time required to pay off a credit card under different conditions They will discover the substantial impact compounding interest and mak-ing only minimum payments have on credit card payments

8 Because identity theft is a growing concern, discuss security issues related to credit cards The Federal Trade Commission reported that in 2007 identity theft accounted for 32% of the 813,899 consumer complaints, with credit card fraud accounting for 23% of identity thefts Identity theft is an expensive crime Losses from identity fraud amounted to over $1.2 billion

in 2007, based on claims reported to the Federal Trade Commission The median loss for an individual victimized by fraud was $349, but 19% of the complaints faced losses over $500 The young are not immune to fraud One third of identity theft complaints in 2007 were filed by people under 30 Those under 18 filed almost 11,800 identity theft complaints Young adults aged 18-29 filed almost 65,695 complaints

9 Ask students for ways to reduce the risk of identity theft, especially for teens Common examples are shredding documents with personal information, avoiding the disclosure of per-sonal information (like Social Security numbers) on the internet or to people you do not know, protecting sensitive mail that could be stolen, and being watchful when using personal identi-fiers (such as passwords at an ATM or a PIN at a store)

10 Use the Benefits of Credit Cards Sheet to discuss positive effects caused by using credit

cards Emphasize that the benefits rely on the responsible use of credit As credit is abused,

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its benefits diminish rapidly.

11 Emphasize the importance of comparing both the costs and benefits together Cost-benefit analysis provides an effective decision-making tool to weigh the net effect of using a credit card People frequently only consider either costs or benefits or only some costs and benefits while ignoring all others Discuss the impact on efficient decision-making if all costs and bene-fits are not considered For example, if someone only thinks about costs associated with using

a credit card and ignores any benefits, that person will underestimate the net benefit (benefits minus costs) and likely choose not to use credit when it may be an appropriate method of pay-ment A supplemental exercise related to the choice between using credit or not can be found

at http://www.econedlink.org/lessons/print.cfm?lesson=MM158&page=teacher

12 As an in-class exercise to engage students at a personal level, use Exercise 3.2 The

Credit Debate This group activity engages students in role playing to analyze the costs and

benefits of credit cards Divide students into groups of three Assign two of the three students

to be “parents” and the remaining student as the “teenager.” The teenager has just turned 18 and wants to get a credit card in his or her own name The teenager must develop an argument based on the costs and benefits of credit cards to persuade the parents to agree The parents must listen to the teenager’s argument, debate the argument by addressing costs and benefits the teenager may have omitted, and make a decision on whether or not to allow the teenager

to get a credit card Allow at least ten minutes for this exercise After all groups have reached

a decision, discuss the results with the class, asking parents why they would allow or not allow their teenager to get a credit card

13 Lesson 4 explores how to make decisions about using income for spending versus

saving

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Teacher observation of group activities

(http://www.masspirg.org/home/reports/report-archives/business-practices-amp-corporate-http://www.careprogram.us

http://careprogram.squarespace.com/free-care-downloads/handouts/

Consumer Fraud and Identity Theft Complaint Data January – December 2007

Federal Trade Commission, 2008

(http://www.ftc.gov/opa/2008/02/fraud.pdf)

The Costs of Credit, a lesson from the

(http://www.econedlink.org/lessons/index.cfm?lesson=MM175&page=teacher)

The Economics of Interest Rates, a lesson from the

Oklahoma College Student Credit Card Study

Center for the Student Affairs Research, Oklahoma State University, 2003

Should I Use Cash or Credit?, a lesson from the National Council on Economic Education

(http://www.econedlink.org/lessons/index.cfm?lesson=MM158&page=teacher)

Teacher’s Guide: How Interest Can Work For You and How Interest Can Work Against You!

Tiêu đề	Taking Control of Your Credit
Tác giả	Grant C. Black
Trường học	Indiana University-South Bend
Chuyên ngành	Economic Education / Personal Finance
Thể loại	Teacher’s Guide
Thành phố	South Bend

Định dạng
Số trang	91
Dung lượng	0,93 MB