Names: Frederick Tavera, Jlon Cherubin, Dagoberto R, Bhonarine Shivcharran, Kenny Ortega, Krish Lakhram.
Financial Future: Learning Assessment Four
- Define/explain the following terms:
- Debt – Money you can use thats owned by a bank.
- Credit- Credit allows the consumer to use the money lended to then, as a result they will have to pay that money back a latter day.
- Interest- Interest is a percentage that is charges in addition t the money you already owe.
- Credit Score- Its a score from 300 to 850. This score shows your reliability to make payments on time. Showing how trustworthy you are with their money. Further letting the bank to trust you with a lager amount of money.
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- You are going to purchase a new iPhone for $800. You have $2,000 in your bank account. You have a debit card linked to your account. You also have a credit card with a $5,000 limit on it at 14% interest. You already have $1,000 debt you are paying off on that card from purchases you made on a family vacation last year, $50 dollars at a time is all you can afford to pay it off. What are the pros and cons of using the Debit Card over the Credit card for this purchase? Which card would you decide to use and why?
- I would use a credit card because the money that im paying back will make my credit score higher and show the back I am responsible with my money and on time payments.
- Debt – Money you can use thats owned by a bank.
- You have two debts you are responsible for.
- $500 balance due on a used car you bought three years ago at 4.5% interest. The minimum monthly payment is $150
- $1000 you owe Best Buy for some electronics you treated yourself with as a graduation present at 14% interest. The minimum monthly payment is $30.
- With your tight budget, you can only afford to devote $220 a month toward paying off debt, meaning you have an extra $50 to pay beyond the minimum.
- How would you apply that extra $50 dollars; would you put it towards the car, towards the electronics or both? Explain your reasoning. Use the Reducing Debit Worksheet explanation of strategies on page 211 of Your Money, Your Goals and slides 37-38 of the PowerPoint to help guide you.
I would put that remainder money towards the Best-buy purchase because it has a higher Interest and paying it off as quick as possible is important because it will keep sucking money out of you because of the high interest percentage.