5.4 Compare and contrast the purposes of credit and debit ROLL CALL QUESTION: SCHOOL APPROPRIATE PLANS FOR THE WEEKEND? Mental Floss Objective 5.4 Compare and contrast the purposes of credit and debit Vocab Credit Interest APR Credit card Mortgage Foreclosure Credit score Credit line Financing Debt Questions: 1. Give an example of credit & a debit to your checking account. 2. What is interest in regard to a savings account? Reminders Test Next Friday Budget Project Parts 1-5 due 11/12 No school 11/11 QUIZ on MONDAY 5.1 Principles of Econ 5.2 Budgeting 5.3 Checking v. Savings 5.4 Credit v. Debit Insurance Story Time! Lets read about credit After we finish reading complete the questions on the bottom II. Credit v. Debit A. Credit : spending $ that you dont have (borrowing) 1. Interest : Paying extra $ for borrowing a. Annual Percentage Rate (APR) : shows you how much your borrowing will cost you over a year. (1). This can help you decide which credit card is best for you B. Types of Credit 1. Credit Card : can borrow a certain amount of $ to spend 2. Student Loan 3. Car Loan 4. Mortgage (Home Loan) a. Foreclosure : loosing your home because you do not pay your mortgage Is Establishing Credit Necessary? YES!!! In the 21 st century you need to establish credit if you want to do the following things Buy a Home Buy a Car Receive a good interest rate on a loan Having a good credit score shows lenders that you are reliable and will pay them back C. Est. Good Credit 1. Credit Score : a number assigned to a person that lets lenders know your ability to pay back a loan 2. To est. good credit you must start buying things using credit and pay that money back in a timely manner. Helpful tips Have bills in your name Always pay bills on time or earlier and try to pay more than the minimum payment Keep a steady job Dont move often Keep your debt low Use your cards responsibly Stick to a budget 3. Credit Line : how much money is available for borrowing 4. Financing : borrowing money to pay for an item you will pay off over time 5. Debt : money that you owe someone (person/business/organization) else Debit Card Pros You dont to carry cash/checkbook Its safe b/c only you know your PIN You are using the $ you actually have which can help with budgeting Debit Card Cons You must have enough $ in your account to make purchases You have to remember your PIN to access cash If you dont keep track of your purchases, you could overdraw and have to pay a fine Credit Card Pros You can buy things before you have saved the entire purchase price It is a way to pay for emergency expenses Using it wisely and paying off on time can help you improve your credit score Credit Card Cons You may have to pay a yearly fee for the card You pay interest on the unpaid monthly balance. B/c of interest, you may pay more for items than if you paid cash Comparing Credit & Debit Card TypeProsCons Debit Card You dont have to carry cash/checkbook Its safe b/c only you know your PIN You are using the $ you actually have which can help with budgeting You must have enough $ in your account to make purchases You have to remember your PIN to access cash If you dont keep track of your purchases, you could overdraw and have to pay a fine Card TypeProsCons Credit Card You can buy things before you have saved the entire purchase price It is a way to pay for emergency expenses Using it wisely and paying off on time can help you improve your credit score You may have to pay a yearly fee for the card You pay interest on the unpaid monthly balance. This means paying more for items than they really cost! Shark Tank The prize for the winning team: Use your notes for an upcoming quiz! I will present your posters to the C&E team and they will choose the product they would most likely invest in Be the Boss Come up with your own business. 1. Come up with a name, logo & explanation of the business/product 2. Explain the factors of production that are used in the development of your business/product. 3. Describe the goods or services you are providing. 4. Come up with two trade-offs to consider in the running of your business/product. 5. What is(are) the opportunity cost(s) of your business/product? Team Evaluations You will be grading your teammates on a scale between 1-5 depending on the number of team members you have Assign the highest number to the teammate (or yourself) who you believe did the best with this assignment Assign the lowest number to the teammate (or yourself) who perhaps did not contribute as much or anything to the team Assign remaining numbers to remaining members based on performance Shark Tank