Navigator: 12th Grade Launch Curriculum - Updates 2024 - 457

STEP 4: Explain how to choose, open,
use, and maintain a credit card.
UNIT 7: TakE acTION
STUDENT HANDOUT
credit cards:
staying balanced
A credit card can be a handy thing to have in an emergency, but
it can also be dangerous. If you make mistakes with your credit
card by using it too much, missing payments, or defaulting on your
debt, you can damage your credit score for years to come. Educate
yourself about credit cards, and you can avoid impacting your
fi nancial future negatively.
Questions to Ask When Applying for Credit Cards
What type of card is it?
There are two main types of credit cards:
Private Label
* Issued by a single source
* Can only be used at a single source
* Examples: Department stores, gasoline companies
General Label
* Issued by a single source
* Can be used in many places
* Examples: Bank card, major credit card
What is the annual fee, if any?
What is the annual percentage rate
(APR) or interest rate?
When are payments due each month?
What is the minimum payment required
each month?
What is the credit limit?
Are there other fees associated with the card?
What are the penalties for late payments?
An annual fee is an amount charged to you each year, whether you use the card or not.
The APR is the amount by which your balance is multiplied to fi gure your interest each month. Look
for a low APR between 0% and 10%. APRs between 15% and 30% are probably too high.
Check that the payment date is around the same time of month as your paycheck, or you might not
have the money to pay your bill.
The minimum payment is the amount of payment required by the account due date, usually billed
monthly. Compare to your income to be sure your minimum payment is not too high for you to be
able to aff ord.
The credit limit is the total amount of credit you are being off ered. A card with a high credit limit
might be a bad choice for your fi rst credit card. Having $5,000 to blow through is not a good idea
when you are just learning to use credit wisely.
Read the fi ne print to see if there are any hidden fees or minimum balance requirements.
You will be charged a late fee and your interest rate will increase. Your credit score can be aff ected
if you make a late payment beyond 30 days.
FINANCIAL AWARENESS
Many credit card companies target recent high school graduates with advertisements and
enticements to try and get you to apply for a card. The decision of whether or not to open a credit card
is a serious one! Don't let a free Frisbee or other marketing ploy sway your judgment. Also be aware of
incentive cards, which off er special rewards when the card is used. Think over the decision carefully,
compare card interest rates and fees, and only open a card if you need one for emergencies.
LESSON 31: MANAGING YOUR MONEY
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lesson 31: Managing Your MoneY
463
TALK IT OUT
When is a good time to use
credit, or to borrow money? When
is a bad time to use credit? How
does your decision to use (or not
use) credit relate to your wants
and needs?

Navigator: 12th Grade Launch Curriculum - Updates 2024

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