Volunteer Instructor Notes

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Key

Distribute Handout

Student Activity

Important Note

Go do it now!

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Some classrooms may not have the capability to play videos, or they may not have proper audio

equipment. Please check with the teacher before you begin presenting. If this is your first session with this class, complete the items below. If you have been to this class before, start with the pre-surveys.

Introduce Yourself

Introduce yourself in a welcoming manner and make students feel comfortable.

Who are you?

What do you do?

Why do you volunteer for Make A Difference - Wisconsin?

What is Make A Difference - Wisconsin?

It’s an organization that delivers financial education to high school students

in Wisconsin.

We focus on providing teens with the financial education and tools needed to

form good financial habits.

Explain why financial education is important.

Set Ground Rules

Share these, or your own expectations for student behavior.

Participate: ask and answer questions.

Listen when others are talking.

Have fun.

Discuss how to earn an incentive (if you’re offering one).

Distribute Pre-Program Survey

Surveys will be completed at the beginning and end of all three lessons to gauge what students know before and after participating. This is important because it allows us to measure program outcomes.

Have each student complete a survey to determine their current knowledge and experience. Make sure students include their name on all surveys.

If students don’t know an answer, instruct them to select “I don’t know” rather than guessing.

Collect the surveys when complete. Do NOT review answers with students.

Transition: Let’s see what we’re going to cover in this lesson…

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Discussion

After reviewing the agenda, move to the next slide and ask students:

What is credit?

Have you ever borrowed money from someone else? Did they set any terms for repayment?

Have you ever loaned money to someone else? Did you charge them interest?

Would you loan money to that person again? Why or why not? (You can lead this into a discussion about borrowing history.)

Transition: Let’s take a look at a common way people use credit.

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Discussion

How many of you own a credit card?

Call on someone to describe what a credit card is and how they use it.

If no one has a credit card, ask someone to describe how they think credit cards work.

Key Points

A credit card is a loan.

Credit cards are different from debit cards.

Explain what is meant by “issuer” of the card.

Stories, Examples & Notes

Transition: It is important to understand credit card terms.

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Key Points

APR is the annual rate that is charged for borrowing, expressed as a single percentage number that represents the actual yearly cost of funds over the term of a loan. This includes any fees or additional costs associated with the transaction.

The Grace Period or Billing Cycle is the time between payment due dates.

Finance charges are fees that represent the cost of borrowing. Finance charges include interest accrued and fees for transactions/annual fees charged.

Balance is the remaining amount (referring to what is owed in the case of credit cards).

Stories, Examples & Notes

Transition: Now that we understand some of the terms, let’s discuss the cost of using a credit card…

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Discussion

So how do credit card companies make money?

What kind of fees might you be charged?

Key Points

Interest is based on the APR. Your APR may increase if a payment is late or missed.

There are no additional costs if the full balance is paid on time. If you make a late payment, you must pay interest and finance charges.

Borrowers can get into financial trouble by using a credit card to buy things they can’t afford. Just making minimum payments costs more in the long run.

Stories, Examples & Notes

Transition: What happens if you only pay the minimum amount?

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Discussion

If you only make the minimum payment, how long do you think it will take to pay off the TV? The computer? The furniture? (Click to reveal the answers)

It takes a lot more time and money to pay off purchases when you’re only making the minimum payment.

How could you make large purchases like these without using a credit card?

Create a budget and savings plan. Saving $500 or $1,000 before making a purchase will likely take less time than making minimum credit card payments.

Key Points

The minimum monthly payment is 3% of the outstanding balance, so it will decrease as the balance decreases.

Credit card companies hope that people make the minimum payment so they can make money by charging interest.

You may want to use this as an opportunity to talk about predatory lending.

Predatory lending is the practice of convincing borrowers to agree to unfair and abusive loan terms. Although predatory lenders are most likely to target racial minorities and the elderly, victims of predatory lending are represented across all demographics.

Predatory lending often occurs on loans backed by some kind of collateral, such as a car or house, so that if the borrower defaults on payment, the lender can profit by selling the repossessed or foreclosed property.

Transition: Unfortunately, many people do not manage their credit cards responsibly…

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Key Points

Paying the minimum may seem like a good way to get something you want, but you may end up making payments for many years, drowning in debt, and digging a hole that you never get out of.

Most times you are better off saving for a purchase instead of charging it.

Now let’s watch a video of some student actors talking about how to use credit responsibly and the benefit of paying things off as soon as possible.

Some classrooms may not have the capability to play videos, or they may

not have proper audio equipment. Please check with the teacher before you begin presenting.

Stories, Examples & Notes

Transition: What happens when you pay more than the minimum?

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Distribute “Comparing Credit Card Offers” Handout

Compare Credit Card Offers Activity

Have students work in pairs or small groups.

Ask students to compare the offers to determine which is best and why.

Help students by clarifying concepts like application fee, annual fee, interest rate, grace period, late payment fee, and over-the-limit fee.

Have groups share their answer with the whole class (Card C is the best offer).

Stories, Examples & Notes

Transition: Let’s look at some credit card tips.

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Key Points

Some cards charge 20% or more in interest, and your interest rate can be raised at any time, even if you've never made a late payment.

Be sure to read the fine print before accepting a credit card offer.

Don’t use your credit card for cash advances – they usually don't qualify for a grace period before interest begins to accrue on the balance, and the interest rate on cash advances is typically higher than the rate for purchases.

Stories, Examples & Notes

This is the Natural Lesson Break – End Session 1 Here

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Discussion

What is a credit report? A credit score?

Key Points

Your credit score is a number… a high number means good credit.

A credit score is similar to how you’re graded in school. The higher the number (70%, 80%, 90%) the better your grade. Turning assignments in on time, doing quality work, and scoring well on exams all lead to a good grade. The same is true of your credit score.

When someone asks “how’s your credit?” they are asking about your borrowing history and how well you manage your loan payments. Credit reports show how much debt you have and whether you’ve made payments on time.

The higher your credit score, the less risk you represent. Your credit score helps a lender determine whether you qualify for a loan and what interest rate you'll pay.

Stories, Examples & Notes

Transition: Let’s look at handout about credit score.

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Distribute “What’s in Your Credit Score?” Handout

Key Points

Credit scores are generated by plugging the data from your credit report into software that analyzes it and cranks out a number. The three major credit reporting agencies don't use the same scoring software, so they may give you different scores.

Your credit score is made up of:

Payment History (35%) Includes accounts paid as agreed, negative public records, collections, and delinquent accounts (total number of past due items, how long you've been past due, how long it's been since you had a past due payment)

What You Owe (30%)

Length of Credit History (15%) Includes total length of time tracked on your credit report, length of time since accounts were opened, and time that has passed since the last activity. The longer your (good) history, the better your scores.

Types of Credit (10%) Includes total number and types of accounts (installment, revolving, mortgage, etc.) A mixture of account types usually generates better scores than reports with only numerous revolving accounts (credit cards).

New Credit (10%) Includes number of accounts you've recently opened, the proportion of new accounts to total accounts, the number of recent credit inquiries, and the time that's passed since recent inquiries or newly-opened accounts.

Lenders also look at factors that aren't included in credit reports,

such as income and employment history.

Transition: What kind of personal information do you think shouldn’t factor into a person’s credit score?

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Key Points

Receiving public assistance will not affect your credit score.

The following kinds of credit checks will not be held against you:

Consumer-initiated inquiries: requests you make for your credit report

Promotional inquiries: requests made by lenders in order to make you a “pre-approved” credit offer

Administrative inquiries: requests made by lenders to review your account with them

Employer inquiries: requests that are marked as coming from employers

The three major credit-reporting agencies are Equifax, Experian, and TransUnion.

Stories, Examples & Notes

Transition: Let’s look at a sample credit report…

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Distribute “Sample Credit Report” Handout

Sample Credit Report Activity

Have students look over the Sample Credit Report handout (attached to the What’s in Your Credit Score handout).

Emphasize that EVERY MONTH COUNTS when paying bills (see section 4 of handout).

It’s a good idea to familiarize yourself with this handout before the lesson.

Don’t spend too much time on this activity.

Stories, Examples & Notes

Transition: Why does it matter whether you have good credit versus bad credit?

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Discussion

What do you notice when you take a look at this table?

Get responses from students and ask them to point out how much more interest is paid between one credit score and another.

Key Points

Don’t fall for seemingly attractive financing offers from less reputable sources. That’s how predatory lending takes place.

Your credit score has a major impact on your loan interest rate.

When you’re making a large purchase, your interest rate can be the difference between spending thousands of dollars!

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Use “Loan Officer ” Handouts

Loan Officer Activity

Select 4 students, assign roles, and distribute scripts.

Loan Officer

Applicant #1

Applicant #2

Applicant #3

Each loan applicant will play the part assigned (they should use the script and ad lib as indicated).

Have the loan officer decide who gets the loan, and/or have the class vote.

Ask students why that applicant presents the least amount of risk.

Stories, Examples & Notes

Transition: Let’s take a look at who can check your credit report and find out why it’s important to have good credit even if you aren’t trying to get a loan…

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Discussion

Who do you think should be able to investigate your credit?

Why would someone want to check your credit?

Key Points

These groups have a legitimate interest in your credit history and score:

Lenders: Want to see if you’re a good credit risk.

Landlord: Want to know if you will be a good tenant. Do you make your payments on time? Do you have a lot of debt?

Insurance Agent: Insurance companies have discovered that people with excellent credit have considerably fewer claims than those with poor credit. Insurance rates are often higher for those with low credit scores.

Employer: Wants to know if you’re responsible.

Stories, Examples & Notes

Transition: So, how do you start building good credit?

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Key Points

Pay bills on time. Late payments for cable, cell phone, utilities, etc. will negatively affect your credit score.

Consider applying for a department store credit card, a credit card with a national issuer, or a small loan with your bank or credit union.

If you’re 18 and have a full time job with regular income, you are able to apply for a credit card or loan on your own.

If you’re under 21 and don’t have regular full-time income, you will likely need a co-signor when applying for a loan or credit card.

A co-signor with an established credit history promises to repay the loan if you don’t. The lender should report the payment history on both of your credit records. The co-signor is taking a risk because how you repay the loan will be reflected on their credit report just as if they were the borrower instead of you.

Department stores usually have lower credit limit and a higher annual percentage rate (APR) but they are generally more willing to lend you money. There’s usually no annual fee for department store cards.

BEFORE YOU GET A LOAN OR CREDIT CARD, BE SURE YOU ARE READY

FOR THE RESPONSIBILITY. ALWAYS USE AND MANAGE THEM WISELY.

Stories, Examples & Notes

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Refer to “Common Mistakes That Can Lower Your Credit Score ” Handout (on back of “What’s In Your Credit Score?”)

Key Points

Tell students to monitor and manage their accounts and their budget responsibly to maintain a good relationship with their financial institution.

Stories, Examples & Notes

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GO DO IT NOW!

Deliver each as a reminder and a “call to action.” Challenge students to do some or all of the “Go Do It Now” tasks within the next 30 days from your lesson.

Distribute Post-Program Survey

Have each student complete a post-survey to determine their knowledge now.

Once students are finished, collect the surveys. Make sure there is a name on each one (remind students to use the same name they used on the pre-survey).

Distribute Course Evaluation

Pass around “Sign up for info…” sign up sheet

Have each student complete a course evaluation to provide feedback on how we can improve this program.

Once students are finished, collect the evaluations. Students do not need to include their name on the evaluations.

Encourage students to add their name to the “Sign up for info…” form and to join our Facebook page. We have pictures of program students, information on jobs and scholarships, and more.

Please return all surveys, evaluation forms, and extra materials to Make A

Difference – Wisconsin. Thank you for making a difference!

Make A Difference – Wisconsin, Inc. 710 N Plankinton Ave. Suite 310

Milwaukee, WI 53203 414-273-8101