Rails Basic

Introduction

Overview

Placeholder biography for Credit. Content coming soon.

Utah State Standards Alignment

Part 1 Credit Vocabulary (15 min)

Teach key terms

* Credit Borrowing money with a promise to pay it back later

* Interest The cost of borrowing money (expressed as a percentage)

* APR (Annual Percentage Rate) The total yearly cost of borrowing

* Credit Score A number (300-850) that tells lenders how likely you are to pay back money

* Principal The original amount borrowed

* Minimum Payment The smallest amount you can pay each month (this is how lenders make money)

Part 2 Credit Score Simulation (20 min)

Give students a 'credit score' starting at 650. Read scenarios and have them move their score up or down

* You pay your credit card bill on time every month (+20)

* You miss a payment (-50)

* You use more than 30% of your available credit (-30)

* You've had a credit account open for 5 years (+15)

* You apply for 5 credit cards in one month (-40)

* You check your own credit report (no change - this is a 'soft inquiry')

Discussion Why do lenders care about credit scores? How does your credit score affect your life? (apartments, car insurance, job applications)

Phase 01

Assessment: Credit Decision Scenarios

Exit Ticket:

Choose ONE scenario and write your advice:

Scenario A: Your friend is turning 18 and wants to get a credit card to 'start building credit.' What advice do you give them?

Scenario B: Your cousin wants to buy a $30,000 car. They have $5,000 saved. A dealer offers them a loan at 18% APR for 60 months. Should they take it?

Scenario C: Your parent is struggling with credit card debt and only making minimum payments. What options could they explore?

Bonus: Use Bankrate.com or NerdWallet to research current average credit card APR and write one paragraph about what you learned.

Phase 02

Hook: The $1,000 Hoodie

Scenario: A student wants to buy a hoodie that costs $100. They don't have the cash, so they put it on a credit card with 24% APR. They only pay the minimum payment each month ($25).

Ask students: How much do you think that hoodie will cost in total? How long will it take to pay off?

Reveal the answer: $136.42 and 5 months. The hoodie costs 36% more because of interest.

Now make it a $1,000 TV with minimum payments of $35: It would cost $1,603 and take 4 years to pay off!

Discussion Question

Is this fair? Should credit card companies be allowed to charge interest? What's the alternative?

Phase 03

The Dark Side of Credit

Discussion Question

When Credit Becomes a Trap

1. Payday Loans: Interest rates of 300-600%. Why are these legal? Who uses them and why?

2. Student Loans: Over $1.7 trillion in national student debt. Was borrowing for college worth it?

3. Credit Card Debt: The average American household with credit card debt owes over $8,000. How does this happen?

4. Predatory Lending: Target poor communities with unfair loan terms. What should be done about it?

Think-Pair-Share: Should there be a maximum interest rate that lenders can charge? What would be fair?

Lesson Finale

Exit Ticket

Resources:

AnnualCreditReport.com - Free credit reports (one per year from each bureau)

NerdWallet - Credit card and loan comparisons

Khan Academy - Personal Finance unit on credit

Consumer Financial Protection Bureau (CFPB)

Utah-Specific:

Utah Department of Financial Institutions

USU Extension Financial Planning

Credit