ACTIVITY 7: FINANCING

Transcription

1 ACTIVITY 7: FINANCING LESSON OVERVIEW: Complete the following: Activity 7.1: Notes Credit Card Statement Activity 7.2: Sample Check and Savings Account Application, and Research Activity 7.3: How to Select a Credit Card Reading and Worksheet Activity 7.4: Presentation How to Earn a Good Credit Score & Reflection ACTIVITY 7.1 NOTES: 1. Take a photo of the credit score scale or briefly describe the range of scores. 2. Define the following terms: a. Closing Date b. Credit Limit c. New Balance d. Available Balance e. Minimum Payment 3. What does Periodic Rate and APR mean for the borrower? 4. Checks: label the routing number and account number. Circle the two areas you can find the check number. Complete the following activities. Explain difference between Debit and Credit to students

2 MoneyWi$e Banking Basics check writing activity JOHN CONSUMER MARY CONSUMER / Any Street Anytown, FL Date Pay to the ➁ ➂ order of $ ➃ Dollars YOUR NATIONAL BANK F or 5 ➅ -: : : 5690 Directions: This check belongs to John and Mary Consumer. Write a check to Mr. and Mrs. Consumer s landlord, Peter Perkins, for $ Date: Write the month, day and year (example: March 5, 2002 ). ➁ Pay to the order of: Write Peter Perkins ➂ Amount ($): Write $ ➃ Dollars: Write Three hundred and ninety five and no cents 5 For: Write Rent ➅ Signature: Sign Mary Consumer Enter the check in Mr. and Mrs. Consumer s checkbook register and figure the current balance. Check Date Transaction Amount Deposits Balance Description Balance Forward $ #5688 2/28 Bountiful Grocery Store $ $ /28 John's Paycheck $1, $ #5689 3/1 RX Pharmacy $20.00 $ Classroom discussion question: Why is it important to enter the checks you write in your checkbook register? MoneyWi$e Banking Basics Seminar Package page 17 of 24

3 MONEYWI$E BANK Sample Savings Account Application Personal Accounts: Minimum $25.00 required to open. Minimum $ balance to avoid a $3.00 monthly service charge. New accounts have 90 days to bring the balance to $ Statements are mailed quarterly. Unlimited withdrawals at any MoneyWi$e Bank ATM (automated teller machine) with your MoneyWi$e Bank Card. Make checks payable to MoneyWi$e Bank. Bring your completed application to a MoneyWi$e Bank branch or send it to MoneyWi$e Bank, New Accounts, Any Street, Any Town, FL If you have any questions about this application, call 888-SAV-WISE. Ownership: Sole Owner Joint Owner Primary Owner Joint Owner Pimary OwnerÕs Name (first/middle/last) Street Address City State Zip Code Social Security Number DriverÕs License Number Date of Birth Home Phone Mother's Maiden Name Name of Joint Owner (first/middle/last) Joint OwnerÕs Social Security Number Joint OwnerÕs Driver's License Number Request for Taxpayer Identification Number (W-9 Certification) Under penalties of perjury, by signing this application I certify that the number shown on this form is my correct taxpayer identification number (Social Security #). Check applicable box below: I am not subject to backup withholding. I am subject to backup withholding. Exempt Residents: I am an exempt recipient under the IRS Regulations. Nonresident Alien: I am neither a citizen nor a resident of the United States.(Complete U.S. Tax Form W-8.) Application continues on next page. MoneyWi$e Banking Basics Seminar Package page 21 of 24

4 MONEYWI$E BANK Sample Savings Account Application page 2 of 2 Optional Banking Services Mail me an ATM Card (New customers who do not have a MoneyWi$e Bank ATM or MoneyWi$e MasterMoney Card). Add this Savings account as a primary account on my existing card (Customers who already have a MoneyWi$e Bank ATM or MoneyWi$e MasterMoney Card). I do not want ATM access for this account. Annual Fee Account:** The $24.00 annual fee covers five (5) Foreign Bank ATM transactions per account during each monthly statement cycle at MoneyWi$e Bank ATMs. ($1.50 per transaction over 5.) Six free transactions per month are allowed at MoneyWi$e Bank ATMs and point of sale (POS) terminals. Pay As You Go: $1.50 for each Foreign Bank ATM transaction per account during each monthly statement cycle at MoneyWi$e Bank ATMs. Six free transactions per month are allowed at MoneyWi$e Bank ATMs and point of sale (POS) terminals. **Fee options are imposed by MoneyWi$e Bank. Other institutions may charge an additional fee for cash withdrawals when you use their ATMs. Some merchants may charge a processing fee when you use your card to make purchases. I also acknowledge the terms of the following disclosures: Deposit Account Agreement Disclosure Special Fees and Conditions for Consumer Accounts By signing this application, I authorize MoneyWi$e Bank to obtain credit or other information about me which the Bank may deem necessary to evaluate. Primary Applicant Signature: Date: Joint Applicant Signature: Date: For Internal Bank Use Only Account # CIF # CVB Plan # Branch # MoneyWi$e Banking Basics Seminar Package page 22 of 24

5 Choosing a bank or credit union account Instructions: Take this form home with you to use when shopping for a bank or credit account that suits your needs. All the questions may not be applicable to your needs or the bank you are talking to. You will learn a lot about available services by asking a bank employee to answer some or all of these questions. Bank Name: 1. Do you have a free account, with no monthly maintenance fee? 2. What are the requirements for a free account? (If you like the bankõs free account option, you can skip to #6.) 3. Do you offer low-cost ÒlifelineÓ (basic) account? 4. What are the requirements for a ÒlifelineÓ (basic) account? 5. What is the monthly service fee? 6. How much do I have to keep in the account to avoid a monthly fee? 7. How much money do I need to open an account? 8. How many checks can I write each month without an additional fee? 9. How many withdrawals can I make each month without an additional fee? 10. Does an ATM or debit card come with this account? 11. How much is the fee to use my card at another institution? 12. Do you offer overdraft protection? 13. Is it linked to: Savings Credit card Line of Credit MoneyWi$e Banking Basics Seminar Package page 23 of 24

6 ACTIVITY 7.3: How to Select a Credit Card: There are many types of credit cards. The largest categories are VISA, MasterCard, American Express (AMEX), and Discover Cards. Most establishments take only Visa and Mastercards. 1. What are the four types of credit card? Companies and businesses need to pay the credit card companies to charge their customers credit cards. It is actually illegal for Californian s to be charged a surcharge by businesses to use a credit card instead of cash (California Civil Code section ). For example, if you use a credit card to pay for $8.41 at Taco Bell, they cannot charge an extra 50 cents because you wanted to pay with your credit card. It is however, for companies to have a minimum amount you need to spend before they charge you. It is also legal for companies (i.e. gas) to have a cash price lower than a credit card price. 2. What is illegal in California? Identify a Card Type: The first step in both the online and offline credit card selection process is to determine what the primary use of your new credit card will be. Do you need to transfer a balance? Are you looking for a rewards card to earn points or cash back on purchases? Do you need a new small business credit card? Perhaps you are just trying to explore your options and are looking around to see what s available. Whatever your reason, it s always a good idea to think about what attributes you want in a credit card as it makes the selection process much easier. It s also good to know ahead of time how you may viewed from a lender s standpoint so that you don t apply for a credit card that you more than likely won t get approved for. An extension of this is that if you do know that you have excellent credit you have many more options. For example, you may want to apply for an offer with rewards, a low interest rate and a 0% intro APR. 3. What type of credit card is suggested for you to apply for?

7 Check Website Security: Checking website security is very important. Because you will be potentially filling out an application containing personally identifiable information such as your DOB, social security number, address, etc., you want to make sure that you are protected. The way to do this is to look at the url where you are redirected. Identify a padlock and make sure that the url starts with https instead of http. This signifies that the site is secure and is shown below in red. You will also be able to identify clearly on the page that in fact the page is secure as it s required by law. Note, these two things as well: 4. In order to ensure your website is secure, there should be a padlock. How should the website address (url) start? In your own words, write a short definition for each: 5. Sign-Up Bonuses: In an increasingly competitive rewards card market, many issuers have gone the route of providing new customers the opportunity to earn a sign-up bonus with new accounts as a way to attract new cardholders. These sign-up bonuses usually require some type of trigger to attain the points or cash back reward. The typical trigger will either be a minimum spend in a certain period of time; however, in some cases, the bonus may be awarded when just one purchase has been made or even upon card activation. 6. Cash Back Cards: Currently there are two different types of cash back credit cards available. The difference between the two lies in the structure of the rewards program. One type of offer has a rotating or revolving category system. This means that the bonus structure changes periodically (usually on a quarterly basis) and the percent rebate on purchases per category reflects this. For example, one quarter you may receive 3% cash back at grocery stores while 2% at fuel stations. The next quarter it may flip. The other type of cash back program doesn't rotate. The structure is set based on the card. 7. Travel Rewards Cards: Airline tickets, cruises, hotel stays, and general vacation expenses can take a toll on your wallet. The good news is that they don't have to if you plan ahead by making purchases with a travel rewards credit card. These deals allow you to earn points or miles toward your next vacation or flight which can help off-set the sometimes prohibitive cost of going somewhere you've been dying to visit. The more you spend, the more you earn, and in some cases you can book a whole trip using nothing but miles or points.

8 8. Airline Miles Cards: Airline or miles credit cards are a good thing for those who are either loyal to a particular airline or who live in an area where a particular carrier has a hub. There are many other advantages to carrying a miles card for a specific airline other than for earning miles to use toward travel. Many of these cards come with the added benefit of admission to their lounges, waived baggage fees, discounted in-flight purchases, priority check-in, and in some cases either free or discounted annual companion airfare. 9. Points Rewards Cards: Points credit cards are the choice of many consumers due to their flexibility. Many prefer to earn rewards that can be redeemed for merchandise, travel, airline tickets, gift cards, or just about anything else you can buy online. When selecting a points credit card you have two different options. You can select a charge card which requires you to pay your balance every month or you can choose a traditional revolving balance offer (credit card) which allows you to pay off the purchases you make over time. 10. Retail Reward Cards: Retail rewards cards are best suited for those who are frequent shoppers at niche specialty stores or in some cases, websites. The rewards structure of these programs usually allow a higher earn per dollar when purchases are made at the particular store and will usually come with an introductory sign-up bonus redeemable for a gift card as well. Retail rewards cards in almost all cases are more favorable than store issued cards, meaning cards provided without a co-branded Visa, MasterCard, Discover, or American Express logo, as store cards tend to have very high interest rates. 11. Gas Rebate Cards: These days it's tough to really know what you're going to pay for gas. The volatility of gas prices with overnight swings of thirty cents or more can really have a major impact on your budget. As the old adage states "it's the small things that kill you." To help combat this several consumers are turning to gas rewards credit cards which function similarly to cash rebate cards. The underlying difference is that with a gas card, unlike general cash back deals, you earn the highest percentage of rebates at fuel and service stations. If you drive frequently for a commute or have an SUV it makes sense to use one when you fill your tank.

9 12. Balance Transfers: A 0% balance transfer credit card could save you hundreds on interest. You may benefit from moving your existing balances on open accounts to a new card from a different issuer and reap the benefits of not accumulating more debt while you chip away at your principal. The current balance transfer market still provides interest savings over a year and if used wisely, can be a very effective credit card debt elimination tool. 13. Annual Percentage Rate (APR): A periodic rate, in years past typically tied directly to the prime rate, that s used to compute interest charges on a credit card account balance. 14. Of the rewards listed (#6-12), which type of reward would you be the most interested in. Why?

10 ACTIVITY 7.4: Presentation How to Earn a Good Credit Score You are going to create a presentation to teach your parents or a caring adult How to Earn a Good Credit Score. Create a visually appealing (photos, graphs, etc) presentation using Keynote, Power Point or your choice of presentation program Use all the sections in your reading from the website: Good- Credit- at- a- Young- Age Teach the information to a caring adult and complete the reflection with them or create a video reflection that answers the questions on the reflection on the next page.

11 Proof of Presentation: How to Get Good Credit at a Young Age Presenter (Student): Presentee (Person who is presented): Presentation Date: Presenter s Reflection: What did you learn from creating the presentation and the actual presentation? You may want to explain your strengths and/or weaknesses. Presentee s Reflection (The presenter must ask the presentee questions and the presenter completes this portion.)