Young People and Credit Cards Assignment Notes

Young People and Credit Cards Assignment Notes Comparing Cards Before you decide whether you should open a credit card, you need to understand how it differs from a debit or prepaid debit card. 1. Watch THIS VIDEO and use this 3-column chart to record important details about each type of card. Debit Card Credit Card Overdraft money Improves credit score limit is set by how much is in your checking account Charges money on balances Prepaid Debit Card Spending is limited by how much is on the card Good for traveling Credit Breaches Can be used at ATMs 2. After watching the video and comparing the cards, which one of the three would be the best option for you as your day-to-day payment method? Explain why. Credit cards, because they are safer to use and can raise your credit score which helps buy other thibgs What Young People Need to Know About Credit There’s a ton of good information on THIS INFOGRAPHIC but let’s focus on two sections which will explain Why Credit Is Useful and, farther down the page, How Young People Get Credit. 1. Why might young adults, in particular, value credit in case of emergency? It takes a while to build up credit ands its important to have for emergincies 2. If you’re trying to gain access to a credit card before you turn 21, which of the suggestions rely on the support of a parent or guardian? getting a co-signer 3. Which of the suggestions do NOT rely on the support of a parent or guardian? Paying student loans and Getting a secure card Things To Consider When Applying For a Credit Card Let’s assume you’re going to open a credit card – and you have a plan for how you’ll qualify for one. There are hundreds (or more) cards available to choose from. How should you decide which one is best for you? THIS VIDEO will highlight four important factors – Annual fee, APR, Penalty fees and rates, and Grace period. Watch the video to learn more. Then, answer the questions. 1. Which of the four factors directly impact your total cost of using the credit card? Anual fee, APR, penalty fees, billing cycles 2. Miles is planning to open a credit card, charge only his monthly streaming service subscriptions (less than $50 per month), and pay his entire bill in full each month so that he never has to pay interest. Which of these factors do you think is most important for Miles to consider when selecting a card? Why? The annual fee because its unnecessary and he could get a card with a zero dollar annual fee. 3. Delara is opening a credit card because her budget is really tight right now and she’s struggling to pay all of her expenses based on her income. a. Why might a card with a long grace period be in her best interest? Because its givees her the most time to get money before the billing cycle b. She knows she’ll be making only the minimum monthly payments each month until she can find a job where she’ll earn more income. This means some of her payment every month will go toward paying interest rather than paying down her principal. What other factor(s) might be most important to Delara? Why? APR because shell need to know the interest rates and the penalty fees.