Managing

Credit cards

Checking Accounts

& other Banking Transactions

Credit CardsCredit CardsThe bank allows you to use money now and pay it back, plus extra money later. You can get the money by using a credit card.

The bank will send you a bill at the end of the month

Let’s talk about tips for using credit cards correctly!

Tip #1

When you get your first credit card, start with a very low limit.

Recommendation- $300

Gives you an opportunity to test the waters.

You can always increase limit later after you show responsibility.

Tip #2

Try to obtain a ‘major’ credit card, such as MasterCard or Visa. If you get

turned down, go with gas cards or major department stores.

Try to avoid the smaller retail stores.

Tip #3

When offered a discount for opening a card with a smaller retail store, smile and say “No thank you.”

Tip #4

Find a bank that doesn’t charge an annual fee on the credit card.

Tip #5

Very important!- Find out what interest rate they are charging you!

Sometimes they offer an introductory rate for a few months, and then shock you with a higher rate later.

Tip #6

There are no interest charges when you pay your card off every month

You are able to borrow the money for a few weeks

with no cost to you.

Tip #7

The best way to build a credit history is to use your credit card and pay in full every single month.

It shows the credit bureaus your ‘ability to repay’.

We’ll discuss credit history and credit bureaus in a moment.

Tip #8

Never spend more than your credit limit.

The bank may increase your interest rate and you may not be able to get it down again.

You may also be subject to additional finance charges or late fees.

This is wasted money!! You work too hard for your money, please don’t give it to them!

Action Items!

Write down 3 of the most important things you should do with credit cards.

Then, share it with your parents.

Section 2http://www.youtube.com/watch?v=WbPQv_

4Pm2w

Moesha – Credit Card

What’s the big deal about credit?

You need to use credit to build credit history.

What exactly is credit history?

A credit history is a ‘reporting’ of your credit usage.

It shows how well you can manage your money.

As you use and pay on your credit cards, you are being ‘graded’.

If you use and pay wisely, you will get a good grade.

Your grade is your FICO score.

There are 3 credit bureaus-

Experian, TransUnion and Equifax

They will score you, based on various factors.

You are also scored on car payments, mortgages, school loans and other debt.

Any debt you have, will show on your credit report.

Except those of personal nature...money borrowed from family or friends.

Here’s a breakdown of general scoring and grading:

740+ A

700-740 B

680-700 C

620-680 D

620 or below F

These aren’t grades written in stone, just guidelines for you to strive for.

Interest rates on cars, mortgages or other debt will be better if your scores are high.

This is why it is so important to have good credit scores! You can save

potentially thousands of dollars, or more, over time just by having good credit scores.

Did you know that some employers will pull credit before they hire you?

They want to see how responsible you are!

Some insurance companies will pull credit too!

Don’t put anything on credit that you can’t pay for in full when the bill arrives.

You can pull credit once a year for free at www.annualcreditreport.com

This report will give you details of your credit, but not FICO score.

Go to www.myfico.com for scores...they will charge you nominal fee.

Section 3

Time for the checking account!

Checking Accounts

Why do people write checks?

Checking Accounts

• Money in a checking account is used is used for everyday expenses.

• There is not a minimum balance that you have to keep in a checking account

How to Make a Deposit

Deposit slip

A Deposit means you areYou are putting money in the bank

Parts of the Deposit Slip

1. ______________________________________________________________2. ______________________________________________________________3. ______________________________________________________________4. ______________________________________________________________5. ______________________________________________________________6. ______________________________________________________________7. ______________________________________________________________

Parts of the Deposit Slip

1. Date2. Cash being deposited 3. Checks being deposited (list individually)4. Total from everything listed above (Sub-total)5. Less cash received (What you want back)6. Net deposit 7. Signature line (if receiving cash back)

1

2

3

4

5

6

7

PRACTICE TODAYS DATE

DEPOSIT $50.00 IN CASH

DEPOSIT 3 CHECKS, FOR $380, $120, AND $75

TOTAL DEPOSIT $625

Practice filling out a deposit ticketComplete 2 more deposit slips for the following:

$16.25 in cash, a check from your mother for $100.00 and check from your job for 225.00

A check $537.00, and you want to get $100.00 back in cash

There are 6 parts a check D ____________________________________________________A ____________________________________________________M ____________________________________________________P ____________________________________________________E ____________________________________________________R _______________________________________________

There are 6 parts a check D Date The date the check is issuedA Amount The amount of money paid to the payee M Maker The person responsible for paying the amount writtenP Payee The person getting the moneyE Endorsement The signature of the person cashing the checkR Routing Number Identifies the bank the check belongs to

D

A

M

P

ER

Checks come in many styles & colors, and some banks require you to buy them since they are personalized

If you do not write your check out correctly the bank will NOT pay the

money.

Checks can not be written for more money than you have in your

checking account.

The bank will charge you a fee and make you pay the money back!

Sample Checks

Practice filling out checks

1.Pay to the order of Sneaker World for $87 for a new pair of sneakers.

1.Pay to the order of your school for $100 or 2 Prom Tickets.

Section 4

Using a Check Register

Things can become unorganized if you do not keep track of your

money and your checks!

When you open a checking account, you receive a check register.

This is a place where you record every check you write, every ATM withdrawal you make, every debit card

purchase, and every deposit that you make.

Careful math is important!!!

How much money do you have left in your checking account?

What will happen if you overdraw your account?

You have the option of ‘banking online’ and paying your bills via the bank’s website.

You still need to document your spending in your checkbook register and keep a running balance.Many people do both

online banking and personal check writing. Just be certain to document all spending in one place (checkbook register.)

Balancing your checkbook!

This is actually very simple, yet imperative.

By balancing your checkbook, you are making sure all activities on your account are correct.

Sometimes banks will make errors or charge you for something you weren’t aware of.

This will also double check your math, as you add or subtract your deposits and withdrawals.

You are basically comparing your checkbook register against your monthly bank statement.

You will track any service charges (which hopefully you won’t have) and interest credited.

Some of the most common mistakes are in the arithmetic, so if it helps, use a printing calculator.

If you use a debit card that is tied to this same account, be sure to write down what you did!If you took out $20 cash from the ATM, write it in your checkbook register.

It’s no different than writing a $20 check to yourself.

Some banks will charge a monthly service fee, phone bank fee, ATM fees or overdraft fee.

Please be sure to check for these every month!You may not

realize you incurred a fee and then overdraft (spend money that you didn’t have in your account). Overdraft fees can

be very expensive!

Many banks have special accounts for teens that waive the monthly service fee.

If you use an ATM, be sure it’s linked with your particular bank. Otherwise you will incur ATM fees.

Banks make mistakes too! Be sure to check your monthly statement carefully for charges that many be incorrect.

If you find an error, contact bank immediately and have them reverse fee.

Step by step~ Balancing your checkbook

* On your bank statement do the following:

Start with: ending balance from statement: $______

Add: Deposits not on statement: $______

Subtotal = $______

Subtract: Checks outstanding (did not clear) $______

BALANCE: (this should agree with checkbook) $______

* From your checkbook register:

Start with: balance from checkbook $______Add: interest earned or other credit shown

on statement, but not in check book. $______Subtotal = $______

Subtract: Service charges or other debits

shown on statement, but not in checkbook. $______

BALANCE: (this should agree with statement) $______

Do this every month to minimize overdraft fees and to stay on top of your finances!

Don’t be shy about contacting bank if you’ve been charged incorrectly!

If you don’t have a checking account yet, check with your parents and see if they will allow you to practice with their account.

They may even pay you for this ‘work’ !

Which brings us to our next topic~ entrepreneurship!