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**Activity**
- Complete the following activity:
Now that Jane and Tommy have their name on a loan, they are
building credit. Their parents decide to help them build more credit
by making them each an authorized user on a gas credit card. This is
revolving credit and can only be used at the particular gas station.
Jane and Tommy are required by their parents to pay off the gas card
each month when it comes due.
- What does revolving credit mean?
- What happens if they do not pay the full balance of their gas
credit card each month?
One year later...Jane and Tommy want to know what
their credit report looks like. With the help of their parents, they
apply online (through the Internet) at the credit bureau, Equifax.com.
The next day they are each able to access their credit reports online.
Jane and Tommy both have good credit, they have not been late for any
of the payments, but Tommy notices that his name is misspelled on his
credit report. He contacts the credit agency, and they request that he
send a copy of his driver's license to the credit agencies, and they
will look into the mistake and notify Tommy when the problem is fixed.
Tommy mails the copy of his driver's license along with a letter
stating the mistake and the change that needs to be made. Two weeks
later Tommy receives a new copy of his credit report with his name
spelled correctly.
- What steps should Tommy take since he found errors on the credit
report from one credit bureau?
- What are some additional reasons for checking a credit report?
2. Discuss positive and negative comments people make about credit.
3. Read pages 8-11 in Money…What Young Adults Need to Know
from the Web site (http://www.nj.gov/njded/aps/cccs/career/resources.htm).
4. Visit the Federal Reserve Board's Web site,
http://www.federalreserve.gov/pubs/shop, and review the information
on their publication, "Shop: The Credit Card You Pick Can Save You
Money." Using terms from this Web site, look at different credit card
advertisements in the newspaper.
- How many different annual percentage rates did you find?
- Compare newspapers during the week and over the weekends.
5. Using these same advertisements, visit the American Banking
Association's Web site,
http://www.bankrate.com/brm/calc/creditcardpay.asp, and use their
online calculator to determine how much interest will cost you for the
advertised credit cards, based on their annual percentage rates.
6. Visit Bank Rate,
http://www.bankrate.com/brm/default.asp. Use this site to create a
list of credit cards that best meets your needs based on goals, type of
card, and class of card. Also, this site has great calculators so you
can compare two credit cards based on factors such as average balance,
annual fees, introductory rate and other factors; and to compute
compound interest and the percent return on an investment.
7. Develop a checklist for reviewing Web sites with information about
credit and credit cards. Use the checklist to assess 3 or more Web sites
Sites may be found through use of search engines and/or indexes. Some
sites include the following:
8. Form teams of students to debate some of the following:
- There are "credit card junkies" just like people having additions
to drugs, alcohol or tobacco.
- Credit cards cause people to overspend.
- Credit cards are for emergencies only.
- Teens should have personal credit cards.
- Credit card companies only send applications to people who can
afford to pay.
- Consumers should use credit cards for unnecessary items. Filing
for bankruptcy is the best way to get a fresh start.
- The best way to avoid credit problems is not have credit cards.
9. Research and develop a flyer/public service announcement on
protection laws for credit cards if they are lost or stolen.
10. Divide class into cooperative teams to develop scenarios for
specific groups of people describing characteristics that would make
them good credit risks. Exchange scenarios and analyze the situation for
credit worthiness.
11. Review several credit applications and compare the types of
information being requested. Applications may be secured from lending
institutions, mail applications, or online resources.
12. Research three alternatives to using credit. Develop a list of
pros and cons for each alternative.
13. Arrange for someone from a credit counseling service to speak to the
class on how the service works, who can benefit from the service, and
specific duties the person performs. Include information about
education, experiences, etc. needed for employment in such a position.
14. Visit a personal finance magazine Web site such as
www.money.com or
www.smartmoney.com
to use the credit card calculators to solve problems.
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