Money, Credit, and other

Adulting Finance Stuff

By Ms. Cassie’s Pd 2 Junior Seminar Students
 Banks and Credit Unions Similarities:

By Caleb Stowers ● Both are mostly

FDIC-insured.
● Both provide checking
Banks Credit Unions and saving accounts.
PROS: PROS:
● It serves the general public, and anyone can set up an
● You can access your money anywhere and at
account at random. anytime.
● Allows you to collect interest on your account.
● They charge no fees because there's no building
to maintain.
CONS:
● They often charge fees for the opening of accounts CONS:
and sometimes have certain times where you can’t
access your money.
● You have to physically go to a building to deposit or ● Your account could potentially be hacked, and
take out cash. you could lose your money.
● Higher loan rates, lesser savings ● The intangibility of your cash could lead to you
overspending
SOURCES: ● Lower loan rates, higher savings
Natter, Elizabeth, (02/13/19),
https://smallbusiness.chron.com/online-banking-disadvantages-2248.html, (02/28/22)
TYPES OF ACCOUNTS
Joint Account / Certificate of Deposit / Mutual Funds
A Joint Account is…
❏ The bank account
shared by 2+ people.
❏ Sharers must
maintain and start the
account together.
❏ Since there is more
money in the account,
you may get more
interest.
❏ Disagreements!
A Certificate of Deposit is… A Mutual Fund is…
❏ A set amount of ❏ Higher interest than
money secured in an both CDs and joint
account for a set accounts.
amount of time. ❏ The interest rate does
❏ Set interest rates on not stay constant.
the amount of money. ❏ A good investment
❏ There is fee if you tool.
take out money before ❏ Diversity!
the agreed time has
passed.
❏ Research!
Online vs. In-Person Banking online vs. in person

In-Person Baking: Online Baking:

Better customer service
Most banks provide the option to bake online
No tech related service problems
More convenient
Can be more reliable
You can set up auto payments and track
Safer
previous transactions
Hackers can get into digital bank accounts and take
money You can access you account 24/7

Access to loans, credit cards, and safety deposit boxes Online banking also has lower interest rates
Financial advisors Different features that could help with
budgeting
 Simple VS. Compound Interest
Simple Interest:
-This is the interest earned on general accounts
-Simple interest is based on the original
amount of the loan or payment
-Simple interest is the interest on loans and
deposits
Example:
(From Interest Sheet)
Say I deposit $100 into a savings account with
simple interest, after one year I’ll earn $5 in
interest.
The next year, I would also earn $5 in interest
unless more money is deposited.
(.05 *100=5)
Compound Interest:
-This is the interest earned on interest accounts
-Compound interest is the interest based on
cumulative interest on established accounts
-Compound interest is the interest on interest
Example:
(From Interest Sheet)
Say I deposit $100 into a savings account with
compound interest, after one year I’ll earn $5 in
interest.
The next year, I would earn interest on the $105.
With compound interest I would earn $5.25.
(.05 *105=5.25)
 Simple VS. Compound Interest

Simple Interest: Sources:

-Interest on principal only
-Better for short term and small investments
Compound Interest:
-Interest on principal and on interest
previously earned
-Better for longer and larger investments
https://www.investopedia.com/articles/inve
sting/020614/learn-simple-and-compound
-interest.asp#:~:text=Simple%20interest%2
0is%20calculated%20on,as%20%E2%80%9
Cinterest%20on%20interest.%E2%80%9D
*The interest sheet given to me in class*
 Debit cards: What to look for & Pros & Cons
What to look for in a Debit Card: Pros

● A Debit card is a convenient and widely

1. You don’t pay interest.
accepted. It’s easy to get a Debit Card.
2. If you need cash, you can get cash back Debit cards don’t go into debt.
from the card
3. Don’t really have any fees. Cons
4. A debit card is accepted everywhere in ● The spending limit is the amount of
the world money you have in your checking
account. Doesn’t build Credit.
● You have to remember your PIN (Personal
Identification Number) Number
● No fraud protection

https://www.nerdwallet.com/article/bankin
g/what-is-a-debit-card
Types of Credit
● Revolving - A set amount at a time

● Installment - Loan for a specific purpose

● Service - receiving a service, then paying for it

● Easy-Access - short periods with high interest

Credit Scores and How to Build Credit
Traditional Credit History:
starts once you make a loan or
use a credit card. This
determines your credit score.
What is a credit score?
A number that tells lenders how reliable
you are to pay what you owe and the
higher the number, the better the score
What affects your credit score?
● Repayment record
● The amount you owe
● Length of your credit history
● How often you apply for new credit
● Types of credit you currently use
How to Build Credit
● Open and maintain a credit account, never pay late and pay balance in full
each month
● Do not spend more than you have, stick to the budget
● Pay your bills before the date that they are due
● Plan ahead for major purchases
● Use your credit card, don’t just leave it

https://www.td.com/us/en/personal-banking/finance/building-good-credit-
score
 Debit v.s. Credit Cards
Jordyn & Maya

Credit Card Debit Card

 Debit v.s. Credit Cards debit vs. credit cards

Credit Cards Debit Cards

Borrow money to make purchases and Money deducted from your bank account
repay it later to pay for purchases

Can help build your credit history Does NOT help build your credit score

Likely charged interest if you don’t pay

your bill in full every month by the due Typically need money in your bank
date account to make purchases

Can be used to make purchases even if You could be liable for fraudulent
you don’t have cash on hand purchases

Fees include late, return payment, balance Fees include overdraft and
transfer, cash advance and/or foreign out-of-network ATM fees, as well as fees
transaction fees for using your PIN during transactions

Liability for fraudulent purchases is limited You could be liable for fraudulent
purchases
Credit Cards - How they work & how to get one Source

How they work How to get one

A credit card gives you access to a line of credit. You borrow against the 1. Check your credit
credit line, repay the debt, and repeat. 2. Find the card you want
3. See if your pre approved ( some card issues have this feature)
Total balance 4. Appy (name, Social Security number, monthly income, monthly
housing payments, credit report and credit score)
- Total amount of purchases
- You can keep using your card as long as it is below your limit You will get approved or denied soon after submitting your application.

Statement balance (APR/365) x Your Balance =Daily Interest charge

- How much you spent in a billing cycle (every month)

- Required minimum payment, total statement balance and due
date ( Many cards give a grace period of 21-25 days after
statement closing date)

Interest(APR)

- If you don't pay your statement balance in full, you will be

charged interest on your balance.
- You can avoid interest by paying your credit card bill in full
 What to look for in credit cards
❏ Annual fees
❏ Interest rates
❏ Rewards and benefits
❏ Credit limit
❏ Fees for balance transfers and cash
advance
❏ Customer service
❏ Credit score requirements

- Secrett & Jake

 Source:
Pros of a Credit Card https://www.experian.com
/blogs/ask-experian/pros-
cons-credit-cards/
● You can build credit

○ A good credit score will make you more likely to receive

loans, save money on insurance, have more accessibility to
housing, and look better to potential employers

● Fraud protection
○ We all remember when Ms. Cassie got her credit card
information stolen, but she was able to get all the money
back because it was a credit card and not a debit card that
would’ve been taking money directly out of her bank
account

● Perks!
○ A lot of different credit cards will give you perks like flyer
miles, cash back on purchases, and different discounts
based on where the card is coming from
 Cons of a Credit Card Source:
https://mint.intuit.com/
blog/credit/pros-and-co
● Accumulating Debt ns-of-credit-cards/#2
○ If you have credit card with large limits and
little self control you could overspend. Even
if you spend a little more than you can pay
back it can work towards a bigger debt

● High Interest Rates

○ You have to pay interest on purchases with a
credit card (unless you get special offers or
have high credit). You pay a little more with
credit card purchases and the longer you
wait to pay it off the more interest you’ll gain

● Potential Harm to Credit Score

○ Credit scores are important part of financial
stability. If you miss payments or exceed
credit limit your credit score is lowered.
Generally Info & Good Rates for Education and Car Loan
Principal: Original amount of money
that is being borrowed
Loan Term: Amount of time that the
borrower has to repay the loan
Interest Rate: Rate at which the
amount of money owed increases
Loan Payments: Amount of money that
must be paid every month or week to
satisfy the terms of the loan
Average used car interest range from
3.69% to 19.81% from most borrowers.
Used car finance rates tend to be
higher than those offered for new
car purchases.
https://www.bankrate.com/loans/personal-loans/what-is
-a-personal-loan/#common-uses
https://www.bankrate.com/loans/auto-loans/rates/#what
-car-loan
1. Find your daily interest
rate. Divide your annual
interest rate by 365.
2. Determine your daily interest
accrual charge. Multiply your
daily interest rate by your
remaining principal balance.
3. Calculate your monthly
payment. Multiply that daily
interest accrual by the
number of days in your
billing cycle.
 Types of Insurance

Insurance - Protection Against Financial Loss

❏ You pay a fee (generally monthly)

❏ Get protection in return

❏ Many different types

 Types of Insurance

❏ Homeowner’s
❏ Usually required if you have a ❏ 2 Types of Life Insurance
mortgage ❏ Term Life
❏ Renter’s ❏ Whole Life
❏ Protects Personal Property ❏ Long Term Care
❏ Health ❏ Long term nursing care
❏ Required in some States ❏ Unemployment
❏ Disability
❏ Worker’s Compensation
❏ Benefits if hurt at job
Sources:
https://www.forbes.com/advisor/insurance/types-of-insurance-policies/
https://www.investopedia.com/financial-edge/0212/4-types-of-insurance-everyone-needs.aspx
Elements of Car Insurance
If you own a car in Hawaii, you must carry the minimum amount of insurance
● $20,000 bodily injury liability per person.
● $40,000 bodily injury liability per accident.
● $10,000 property damage.
● $10,000 personal injury protection.
What is the average cost of car
insurance in Hawaii?
The average cost of car insurance in
Hawaii is $1,080 per year according to
the zebra.com. That's 27.4% lower than
the national average. Of course, your
auto insurance cost will depend on
many different factors including your
age, where you live, and your driving
history.
Identity Theft and Prevention
Identity theft is one of the most dangerous things that can happen to you.
Someone can digitally pose as you if you’re information gets leaked (name, address,
credit card numbers, phone number, logins etc.)

To prevent this, make sure to have 2 factor authentication enabled,

make your passwords as strong as possible (20 characters if allowed, numbers and
letters strongly recommended)

Sources: https://www.identitytheft.gov/#/ & https://www.usa.gov/identity-theft

 The Cost of Loans - Philip Chang

LOAN FEES: Loan costs means any and all fees, costs and expenses, including, without limitation, any loan application and origination
fees, review fees, consent fees, lender's attorney fees and other costs, expenses, and fees. As you look for the right loan, be sure to not
agree to anything that you don't understand. Loan fees should never be more than %5 of the total loan amount unless you are paying a
lower interest rate.

PREDATORY LENDING: While some lenders can be trusted, some cannot. Predatory lending is when a lender direct a borrower away
from loans with more affordable interest rates. Predatory lenders often target low- and moderate-income persons, underserved
populations, and the elderly.

The things to look for to make sure you're not a victim of them: 1. They offer you loans that are NOT based on your ability to repay the
loan, 2. They charge unusually high interest rates for a loan, and 3. They include hidden fees.

CAPITAL: depending on the type of loan, lenders are interested in how much of your own money you will pay upfront. Lenders consider
all assets you own in case you need to sell them to repay your loan.

COLLATERAL: your lender will often ask you to choose something of value as a guarantee that you will repay your loan. If you are unable
to repay the loan, then the lender will take the item as repayment. You might use your savings account as collateral for a loan. Lenders
never want to repossess, to take a borrower's collateral due to failure to pay money owed, unless they have no other choice.
Loan Costs Definition - Law Insider
Sources:
Law
Grading Rubric
**This is a 13 point assessment grade**

Explains the topic, expanding on the info. Provided by Ms. Cassie /3 points
The explanation and info provided is clear and understandable

The presentation presents the info in a visually appealing manner /2 points

The presentation shows the topic in a concise & clear way

The product is Research-based /3 points

The advice given is in line with at least two reputable resources & those
Sources are listed

Presentation Delivery /3 points

Speaks clearly, loudly, and with appropriate inflection. Is familiar with the
Content and does not read off the slides

Adheres to the time frame (2-5 min) /2 points