Finance and financial system

The basics of credit cards (Instructor Copy).

Instructor note: 

Answer the questions

•  How do you pay for things when you shop or pay bills—cash, debit card or credit card?

•  How would using a credit card possibly make your overall cost higher?

•  How can you avoid these extra costs?

Applying for a card.

When you apply for a credit card, the financial institution will check your credit history and decide whether or not to give you a card. They’ll also decide how much you’re allowed to borrow, or “charge.” This is called your credit limit.

How credit cards work.

Every time you use a credit card, you’re actually borrowing money from the financial institution that issued you the card. The financial institution pays the debt to the store for what you bought. You then pay the money back to the financial institution. (Remember: debit cards work di恁erently! When you use a debit card at a store, you may have the option of selecting “debit” and entering your PIN, 

or “credit” and signing your name. Either way, the money is deducted from your checking account.)