What is a credit?
Credit is agreement between you and bank or store that allows you to buy
 something 
NOW that costs money if you promise to pay money back in the FUTURE.  You 
pay back total amount you spent  plus "interest" fee — plus "penalty" fee of $25 to 
$50 if you pay late.  Your credit limit is based on age, income, and your FICO score 
(score to tell lenders if you paid bills on time in the past).  Person
 with high FICO 
score of 700 to 850 gets high credit limit such as $10,000 because this 
person knows 
how to handle credit.  Person with low FICO scores of 550 or lower gets 
low limit 
such as $1,500 because a low FICO score proves the person does not pay b
ills on time.
What is interest rate?
Interest rate charged to you is also based on your FICO score.  Credit interest rate may b
e 4% to 24% and 
more.  Persons with high FICO scores get lower interest rates.  If you b
orrow $1,000 and pay it back in one 
year, 4% interest fee is $40 (.04 x 1000), and 24% interest fee is $240 (
.24 x 1000).  APR is Annual Interest 
Rate when other bank or store fees are added.  It is important to check 
"advertised interest rate" and "APR 
interest rate" to see amount of extra fees the bank or store has added t
o your credit.  APR is always higher 
than advertised interest rate.  Some banks and stores may charge you "annual (yearly) fee" of $15 to $50 
just so you can have their credit card. It is best to get credit cards f
rom banks and stores with no annual fee. 
What is a credit card?
Piece of plastic that fits in your wallet with your name, credit card number , and 
expiring date on front — white rectangle to sign your name and 3 numb
er CVV (Card
Verification Value) on back.  American Express card puts 4 number CVV on the front.   
How do I use a credit card?
You want to buy new $2,000 TV for the Super Bowl.  You have a new bank credit card 
with limit of $3,000 in your wallet.  Interest rate on your credit card 
is 18%.  You take out your credit card 
and give it to the sales clerk.  Sales clerk uses a small electronic mac
hine to scan your credit card and prints 
out a paper receipt.  You sign the paper receipt.  Then you take the TV home to set up for the Super Bowl 
game.  Your bank will send the store $2,000.  In 30 days, your bank will mail (
or email) you a bill that says 
you owe $2,000 with "minimum payment" of $80.  Your bank is VERY HAPPY if you only pay the 
minimum payment because then the bank will earn lots of free "interest" 
money from you.  Here is what 
happens when you make monthly payments.
.
Mike's Credit Card Balance:  $2,000 — Interest Rate:  18% — Minimum Payment is $80
Amount you decide to pay monthly:        $80   $400   $2,000
Number of payments needed to pay back $2,000:     97 months 21 months 1 month
Total you paid back with "interest":                            $3,073.60 $2,159.66 $2,000
With low monthly payments, you take longer to pay, then the bank or store gets lots of extra "interest" 
money from you!  If you pay your credit card balance off within 30 days, you owe ZERO interest.	
Your Money: Credit Cards (page 1 of 2)	
Your Money: Credit Cards

Permission to use with usworkworld.com subscription.  
1. a) What is credit?   b) You pay back total 
amount plus what 2 things?  c) On what 3 things 
is your credit limit based?  d) What is FICO? 
2.  a) What interest rate do high FICO scores get?  
b) If you borrow $1,000 at 18% interest, and 
pay back in one year - how much is interest fee?
3.  a) What is APR?  b) Is advertised interest rate 
or APR interest rate higher?  c) What annual fee 
may be charged?  d) What is best?
4.  For what words does CVV stand?
5.  a) When buying TV with credit card, what do 
you sign?  b) What does your bank send to the 
store?  c) What does your bank send to you?  
  d) When is your bank VERY HAPPY and why? 
6.  a) If Mike pays $80 per month, how many 
years will it take to pay off the $2,000 TV? (12 
months in one year) --  b)  How much extra 
QUICK CHECK:	
Your Money: Credit Cards (page 2 of 2)	
How do I keep my credit card information safe?
Once you get a credit card,  sign the back so no one else can use it.   Put papers you get with the credit card 
in a safe place.  These papers tell you the phone number to call in case your card gets lo
st or stolen.  
Make a copy of the front and back of your credit card for this file.  You may 
need to call a phone number to "activate" the card.  
Give your credit card number, expiration date, and CVV number ONLY to real 
stores and online stores that you trust.  Buy from online stores with "h
ttps" in 
their address — "s" stands for "secured" website.  When buying something over the phone, make sure 
you are the one that called the store.  Keep paper or email receipt from
 the sale to compare with amount 
charged on your credit card bill.  If you find a mistake, quickly call your credit card company.  Keep your 
credit card in a safe place.  Only carry your credit card when you plan 
to use it.  Do not give your credit 
card to ANYONE!  Even friends can double-cross you to get something free leaving you with the bill.  
Monthly bills are emailed or snail mailed to you — or you may go to y
our bank's website to view your 
credit card bill online.  Create a strong password of letters, numbers, 
caps, and symbols.  Do not use easy 
to guess passwords!  Do not use these easy and most used passwords:  123456, Password, qwerty , letmein, 
football, iloveyou, welcome, monkey, abc123, starwars, dragon, whatever.  Do not use same password for 
all your online accounts. To be super safe, change your passwords every 30 days to 60 days.
You may receive scam e-mails from criminals who want your credit card inf
ormation and bank password.   Criminals can make emails look exactly like your bank's email.  Sender's
 email address 
needs to end in your BankName.com.  PayPalCustomerService @PayPal.com is real.  
PayPalCustomerService @banksecure.com is a criminal's email.  If you do not know if 
an email is real, call or email your bank to ask.  Never click on  or re
ply to on a criminal's 
email link because your computer will receive a virus that may steal inf
ormation on your 
computer. 	
money beyond $2,000 will Mike pay back to 
his bank when he pays only $80 per month?  
c) What can Mike do to pay $0 interest?  d) If 
Mike saves $200 per month to pay for a TV, 
how many months will it take Mike to save 
$2,000 to pay cash?
7.  Once you get a credit card, list 3 things to do.
8.  What 3 things may you give to stores you trust?
9.  For what does "s" in https stand?
10.  a) Why do you keep paper or email receipts?
  b) What do you do if you find a mistake?
11.  Why may friends double-cross you?
12.  a) List 4 things a strong password has.  
  b) List 3 easy passwords.
13.  a) Give example of real email address and 
criminal's email address.  b) What do you do if 
you do not know if email is real?  c) Why do 
you never click on criminal's email link?