Idea 20of 23Builds onBudget for a class sale
Credit is borrowed money
Whose money pays when you buy with a credit card?
Today you'll discover
- what credit and debt mean
- what a credit limit is
- how to pay a card with no extra cost
Think firstA credit card with a $500 limit
Ava's mom buys $180 boots with her credit card. Whose money pays the store now?
Decide first, then press Next. The whole bar is the limit; the shaded part is owed.
A long empty bar for a credit card with a $500 credit limit. A shaded part, boots $180, fills the left of it. Under the bar: owed $180, a debt; still available $320. Then a box for the monthly bill: pay all $180 by the due date and there is no interest; pay late or leave some unpaid and interest is added. The last step shows a $300 limit with an $85 jacket and $40 shoes.
See the whole ideathe big idea and the key word, in one place
The big idea
Credit is borrowed money: buying with a credit card makes a debt you must pay back.
Debit or creditDebit: your own money, gone now. Credit: a lender's money now, your money later, when the bill comes.
Easy to get wrongThe card's limit is not a balance to spend. Every dollar used on it must be paid back.
Key words
- credit
- borrowing money now and paying it back later, as with a credit card
- debt
- money that is owed and must be paid back
- credit limit
- the most a lender lets you owe on a credit card
Ready to use it?
- Say what is owed and what is still available.
- Explain the difference between credit and debit.