Page 209 - digitalliteracy

Summary & Resources

2. Marcos is looking forward to college. His parents will not be able to help him much
with the costs, so he is going to finance his own education. He has already found a
one-bedroom apartment that has all the amenities he has always wanted, such as a
workout facility, tennis courts, swimming pool, and covered parking. What advice
would you give Marcos if he asked for your opinion on his college future?
3. Camila recently graduated with a degree in finance and has landed a coveted job
at the Federal Reserve Bank. She will begin to pay off her student loans in a few
months. She would like to lower her payment so she has more money to rent an
apartment, buy furniture, and save up for a car. As Camila’s best friend, what advice
might you give her? What are the consequences of making a lower payment on her
student loans?
4. Daniela’s carpool buddy was recently transferred to a different job location and can
no longer drive Daniela to work. Daniela does not have access to public transporta-
tion. She needs to buy a used car to get to work and will need to borrow money to do
so. She has never looked at her credit report and did not even know she had a credit
score until she talked with her bank. Why is it important that Daniela see her credit
report and be aware of her credit score?
5. Kevin has had money problems over the past few years and feels like he will never
catch up. He seems ready to give up. How would you respond to Kevin when he says,
“What does it matter? No one cares if I have good credit or not.”
6. Julie received a credit card in the mail that she did not order. What is the first thing
she should do?
7. Mariana does not look over her credit card statement. She knows what she bought
and sees no need to spend her time examining every purchase. What is the problem
with Mariana’s philosophy?
8. Shana recently broke up with her boyfriend and went on a shopping spree that put
her deeply in debt. She cannot return what she purchased and has been making the
required minimum payment on her store credit cards. What can Shana do to get out
of debt as quickly as possible?

Key Terms

compound interest Interest that is applied credit score A rating created by a credit
to the principal balance of a loan or invest- bureau based on your credit history and
ment plus any interest that has accrued. publicly available information. A higher
score means lower interest costs because
credit The act of borrowing money to pur- the lender considers you a reliable borrower.
chase goods and services.
deferred-interest loan A loan for which
credit bureau An organization that gath- interest does not accumulate over time. If
ers credit history and other publicly avail- you have a deferred student loan, you do not
able financial information about individual accrue interest until you graduate.
consumers.
Fair Credit Billing Act A federal law that is
credit report A statement that shows all intended to protect consumers from unfair
your credit accounts, repayment history, billing practices and give them a way to
open lines of credit, credit limits of each address billing errors for credit card and
account, and whether the account is in good charge card accounts.
standing.

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