## Step 2 - Reading

Reading
You’re going to read an article that gives some advice about credit cards.
Then you do assignment 1, 2 and 3.
First, look at these topics. Which do you think will be mentioned?

- Talking to the bank manager
- Paying bills on time
- How to avoid paying more money
- How to increase your credit
- Avoiding buying things you cannot afford
- Live only on cash

Now read the article quickly and fill in the topics in assignment 1.

A. [...............] Each of your credit card transactions is tracked. A statement is a breakdown of your transactions for the month. It is important to note that your statement period does not necessarily begin at the start of each month. If you are unsure of when it starts and ends, talk to your credit card company. At the end of the period, you will be given a summary of your spending in the form of a paper or online statement along with your balance owing and payment due date. Read your statement carefully! Look at what you have been using your credit card for and determine whether those purchases were, in fact, necessary. When debt is a cloud overhead you should be putting on a pair of rain boots, not a new pair of heels. B. [...............] It may be appealing to pay that minimum payment of $10 rather than the $100 you put on your card last month, but failing to pay the full balance on your credit card will only set you back further. For example, if you were to only make the $10 minimum payment then it would take you 10 months to pay off $100 at which point you will have likely added on another few hundred dollars in purchases. Most credit cards also have a monthly interest rate. Paying your credit card balance on time and in full will help you avoid any additional interest charges. Keep in mind, however, it is always better to pay back something than nothing. C. [...............] Companies love tacking on additional fees to customer accounts and banks are no different. It may seem convenient to withdraw money from the ATM with your credit card, but unlike your debit card the charges for cash advances on your credit card can be substantial. Once additional charges are accounted for that single withdrawal will have left a bigger hole in your wallet than you had intended. D. [...............] Now, you may be thinking: “If I had money why would I need a credit card?” But just as you should not be spending money on things you do not need, you most definitely should not be spending money that you do not have. Exceeding your credit card limit will not only put you in the red but will result in additional fees. Treat your credit card as you would your debit card, which is hopefully by spending only the amount that you have available in your account. If you have $200 in your account, and you need to spend $50 on gas, then use your credit card to pay for gas, and immediately transfer $50 from your account. This way you are effectively using your credit card, improving your credit, and staying within your limit. E. [...............] Until your credit card situation is under control keep to a cash-only diet. Set yourself a budget per month for all your expenses and the purchases you expect to make. It will be easier to save than spend when you have to hand over physical cash instead of swiping your card. Prior to solving any problem you have to understand it. By gaining a better understanding of your financial situation and the role your credit card plays you can find a balance between spending and saving. Follow the above tips and you will gradually build your credit while avoiding the pitfalls of credit card debt that so many of your classmates will experience this school year.

Do the exercises.

Do assignment 2. Choose the correct paragraph titles.

#### Assignment 3

Answer the following questions with your classmate.

1. Do you agree with every point that the author makes? Why /why not?
2. Do you have a ‘good understanding’ of your financial situation?
3. Do you have an after school job? If so, what do you do with the money you earn?
   If not, do your parents give you pocket money, or do they buy you what you want? Explain what your situation is, and any reasons for it.
4. Do you plan to get a credit card in the future? Do you think it’s a good idea? In what situations would you use it? In what situations would you not use it? Say why.