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Course: Financial Literacy > Unit 11
Lesson 2: About this unit: Consumer creditLearning objectives and key concepts: Consumer credit
Here you will find clearly marked learning goals in "student will" statements, which complement the objectives of the existing units and help frame your instructional approach.
Unit overview
This unit is designed for students in high school or college, but anyone who wants to learn more about consumer credit can benefit from it. Students can watch the videos, read the articles, and do the exercises at their own pace, or you can follow the suggested lesson plan below. You can also use the resources and activities in the unit to supplement your classroom instruction, homework, or projects.
The unit consists of three lessons, each covering a subtopic of consumer credit. Each lesson has a set of videos, articles, and exercises that explain and illustrate the key concepts and skills. The suggested lesson plan for each lesson is:
- Watch the videos and take notes on the main ideas and examples
- Read the articles and review the key terms and definitions
- Do the exercises and check your answers and explanations
- Discuss the questions and scenarios with classmates, teacher, or family
- Do the extension activities to apply, evaluate, analyze, and design own solutions
By the end of this unit, students should be able to understand what a credit score and a credit report are, identify ways to improve their credit score, and know how to review their credit report. They will understand the implications of using credit as a payment method, and have a better sense of how to pay for items.
The lessons and their learning objectives are:
Lesson 1: Credit score
This lesson introduces the concept of a credit score, explaining its role in determining an individual's creditworthiness. The key concepts include:
Credit score: This is a statistical number that evaluates a consumer's creditworthiness. Lenders use credit scores to evaluate the probability that an individual will repay loans in a timely manner.
Ways to improve credit score: The lesson offers practical strategies for enhancing a credit score, such as making timely payments, reducing the amount of debt owed, and being cautious about the frequency of new credit applications.
Credit report: This is a detailed breakdown of an individual's credit history prepared by credit bureaus. It plays a crucial role in the calculation of a credit score and can be periodically reviewed for accuracy.
Students will be able to:
- Describe what a credit score and a credit report are and how they are calculated and used.
- Identify the factors that affect your credit score and credit report and how to improve and maintain them.
- Explain how to access and review your credit report and how to correct errors or dispute information.
Lesson 2: Credit cards
This lesson focuses on understanding and effectively using credit cards. The lesson covers several key concepts:
Credit card fundamentals: basic functions of a credit card, including borrowing funds for purchases, short-term financing, and interest charges.
Types of credit cards: various types of credit cards available, including standard, rewards, secured, student, and charge cards, enabling students to identify which one best suits their needs.
Choosing a credit card: what to look for when selecting a credit card, such as interest rates, fees, credit limits, benefits, and customer service quality.
Understanding credit card terms: credit card terminologies like Annual Percentage Rate (APR), grace period, minimum payment, credit limit, and various fees, helping them make informed decisions about credit card usage.
Students will be able to:
- Explain how credit cards work and how to use them responsibly.
- Compare and contrast different types of credit cards and their features and fees.
- Evaluate credit cards and identify the best credit card for a given scenario.
Lesson 3: Payment methods
This lesson addresses the age-old question of "what is the best way to pay for something?". It goes over advantages and disadvantages to most typical payment methods (cash, debit, or credit) and it introduces other ways of paying for things like rent-to-own, and layaway.
Students will be able to:
- List and explain the advantages and disadvantages of using cash and credit cards.
- Compare and contrast different payment methods (cash, debit cards, credit cards, layaway, in-store financing (store credit) and rent-to-own), based on factors such as convenience and total cost/
- Apply their knowledge of various payment methods to hypothetical scenarios, selecting the most appropriate method and justifying their choice.