Owing Worksheet

1. The advantages of using a credit card are that you have time to pay
back the amount you owe at a minimum monthly payment. Also, it
allows you to be able to spend money you may not have at the
moment. Many credit cards also ofer rewards benefts such as airline
miles or cash back. The disadvantages are that you are charged
interest on the balance carried on your credit card and if you only
make the minimum monthly payment, you will end up spending more
in the end due to interest. owever, credit cards are a very good way
to start building credit so that one day you can buy a house or take out
a car loan.
!. A. "redit limit# the ma$imum amount that can be put on your card
%. Minimum monthly payment# the lowest amount you can pay back
each month
". &race period# the time frame in which you can pay, and not be
charged e$tra, after the due date
'. (ate fees# the amount charged if no payment is made within the
grace period
). *nterest rates# the percent of interest charged for borrowing money
+. ,ecured credit cards# credit cards that are linked to a cash balance
for new borrowers or those with poor credit
&. "redit reports# records of your borrowing and paying habits- what is
used to determine your credit score
Activity
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"redit and 'ebit "ards# 5hat 6ou 7eed To 8now
Article 9uestions
1. The main diference between credit cards and debit cards is debit cards
are linked to a checking account and automatically deduct the amount
being spent from that account. "redit cards are a line of credit you can
borrow against where your balance due increases as you spend. *f not
paid of in full each month, credit cards charge interest on the balance
being carried.
!. Three benefts of debit cards#
"onvenient alternative to cash
"an help you budget if you use your card to pay bills and day:to:day
e$penses
(ess likely to overspend than with credit cards
.. ;verdraft protection is a feature banks ofer on checking accounts that
allows you to spend more than what is available in your account
balance for a fee.
1. *nterest is the percent or rate of e$tra fees charged on a credit card or
loan balance. The interest is the cost of borrowing the money.
2. "redit cards charge you interest to borrow their money because that is
how they make their money. The payments and fees they collect from
each card holder also allows them to continue loaning out money to
new card holders.
3. The billing period is generally 12:12 days.
4. *f you take longer than the billing period to pay the credit card
company back you will be paying interest on the balance. +or e$ample,
if it takes two years to pay of a <2== balance at an 1>? interest rate,
you will end up paying <1== more in interest alone.
>. *f a thief steals one of your cards and uses it to make purchases you
can call the card issuer, make a dispute claim, and the charge will be
removed from your balance. *t is safer to have your credit card @not
debit cardA stolen because it can take weeks for the bank to
investigate your claim and replace the lost funds on a debit card.
B. ,ome possible diferences between diferent kinds of credit cards are
the benefts or rewards they ofer, whether or not they have an annual
fee, and the interest rate charged. *t is a good idea to shop around for
the best one because the more you use that one card, the more
beneftCrewards you will gain from it and diferent cards are better for
diferent people. *t also makes a diference whether you plan to pay of
the balance each month or carry a balance.
1=. A credit score is a number assigned to your credit history based
on your track record of paying back debts.
11. *f you donDt pay of your credit cards on time each month, your
credit score will go down.
1!.The key to successfully using debit and credit cards is not to spend
more than you have with either.
Activity
*tem * couldnDt aford# "oach purse
ow much does it cost# <!>B.==
Amount of interest on top of purchase price# <4>.==
ow long it will take to pay of# ..=> years
,hort answer
;verspending on credit cards could easily lead to debt and fnancial
ruin because of the interest you are charged on all purchases. *n the end, it
always costs more to purchase on a credit card if you do not pay the balance
of in full each month. *t is easy to be enticed by the ability to buy now and
pay later. Also, the more credit card debt you have, that you are carrying a
balance on, the lower your credit score is. The lower your credit score, the
more diEcult it is to get a home or car loan and the interest rate the lender
ofers you is higher than for someone with a higher credit score.
,tudent (oans
1. The four ways to raise money for college#
7eed:based aid
,tudent loans
,cholarshipsCgrants
5ork:study programs
!. 7eed:based aid is fnancial aid that you receive from the school to help
cover the costs of your tuition and fees. The amount you receive is
based on your familyDs estimated fnancial contribution, how many
siblings you have attending the school, and your personal contribution.
,cholarships, on the other hand, are awarded based on achievement
andCor talent. Most reFuire that you complete a certain number of
community service hours or submit something that you have created,
such as a piece of art work. owever, many scholarships are need:
based as well and you must demonstrate the need for the award funds
you will receive.
.. The most common forms of student loans come from the federal
government.
1. A college education typically costs <3=,=== .
2. 6ou apply for student loans by completing the +A+,A and then you
must choose which type of student loan you want.
3. (ike credit cards, loans charge interest in e$change for letting you
borrow large amounts of money.
4. The two maGor types of student loans in the 0, are Herkins and
,taford.
>. (oans can typically be repaid after graduation.
"ar (oans
1. Auto loans, like home loans, are secured by an asset. *f you take out a
loan to buy a car, the fnance company will hold the title to your car
until it is paid of. At that point, it will sign over the title to you.
!. 6our monthly car payment is based on#
1. the price of the car 2. licensing fees
!. related e$penses 3. the siIe of your down
payment
.. ta$es 4. the interest rate
1. title fees >. the term of the loan
.. 6our credit score is so important in determining your interest rate on
the loan because it is an indicator of your credit payment history and lets the
lender know how likely you are or arenDt to default on the loan andCor make
late payments.
1. *t is a good idea to Jshop for a loanK before you go into the dealership
to buy a car because you could probably get a better interest rate from a
credit union or bank where you have a goodCpositive history. *f you use the
dealershipDs loan, you have to go through their bank, who may not ofer you
as good a rate.
2. Always read the +*7) print.
3. *f you are ofered =? interest fnancing, the dealers will mark up the
price of the car to make up for the lost interest on the income they would
normally receive.