Activity 5.1
Understanding Credit

Seems like you can't turn on your TV or radio these days without some celebrity (i.e. Dan Marino) pitchman telling you how easy it is to obtain the money you need. Want to buy a car? A new home? Need extra money for the holiday shopping season? The airwaves are filled with companies that want to extend credit, to the right borrower of course.

If you have bought a new car or a home, or are thinking of paying for a college education, you have no doubt been faced with the prospect of taking out a loan. For many of us, our first encounter with credit came in elementary school. How so you might say? Well if you were like me you probably forgot your lunch money on more than one occasion.
Did you ever have to plead to your friends to lend you money so that you could buy lunch? If your friends were young entrepreneurs like some of mine, they gladly lent the money, but there was always a catch. I would have to pay them back with more than I borrowed or do some other favor in return for taking their loan. Here was an economic lesson learned early in life - credit is not free. People make money by lending money.
  • What are the appropriate uses of credit?
  • How can you avoid the pitfalls of not using credit wisely?
  • What precautions can you take so that you do not become one of the thousands who have accumulated more debt than you can ever expect to pay off in a reasonable amount of time?

These are the questions that you will be examining in this activity.

To learn about the appropriate uses of credit, Activity 5.1 requires you to interview a bank manager or a financial planner.


Click on Sarah to see how to conduct your interview. (5_1a.htm)

Activity 5.1 Understanding Credit
100 Points

Go to the Assignment Area to submit this assignment.

1. Read and complete the requirements.

2. Submit this activity .



homepace