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Earn Your Future ®

Digital Classroom
Level 2: Mission to
Konfido

Module Resource
Guide
Table of contents
“Mission to Konfido” Module Resource Guide ................................................................................ 1
Background information about the topic ........................................................................................ 3
Teaching the module........................................................................................................................ 5
Assessing student learning ............................................................................................................ 12
Extending student learning ........................................................................................................... 17
National standards for financial literacy ....................................................................................... 18
Related resources for students ...................................................................................................... 19
Module notes/sources....................................................................................................................20

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“Mission to Konfido” Module
Resource Guide
Topic: Credit and Debt

Suggested grade level

Although this module may be used for all grade levels, the content was designed for grades 6-8.

Hardware recommendation
All Earn Your Future (EYF™) Digital Classroom modules are accessible on any device, however, for
optimal user experience it is recommended modules are accessed via desktop or tablet. Please note, the
EYF Digital Classroom modules are not optimized for use on mobile devices (iOS and Android).

Technical Specifications
While the EYF Digital Classroom modules will function in all browsers, including Internet Explorer,
Safari, Chrome, and Firefox, browser load speeds will vary. For best performance, it is recommended
that the most current version of your browser of choice is used when accessing the modules. Please note,
connection speeds may be impacted by factors such as highly trafficked shared WiFi access, public WiFi,
and accessing modules behind a firewall.

Module summary
In this module, students’ mission is to complete a journey to the fictional planet Konfido—a futuristic
destination in outer space where residents have achieved creditworthiness—and demonstrate that they
are creditworthy enough to land. Students begin their journey by learning that credit is a form of
borrowing and discovering how credit works. They then learn about interest and interest rates. Next,
students explore fees associated with using credit. Students consider how to use credit wisely and when
it’s best to use credit versus other forms of payment. As they answer questions correctly, they earn Fuel
Points to help them extend their travels. At the end of the final challenge, they learn how far they have
traveled and what level of creditworthiness they have achieved.

Key learning objectives

• Students will understand why borrowers pay interest on loans

• Students will Understand that credit cards are a form of borrowing money
• Students will be able to explain why some people pay more interest than others
• Students will determine conditions that make credit cards (or APR) interest rates rise or fall
• Students will understand how people can use credit wisely

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Procedure
This module is designed to be flexible to meet the needs of many different learning environments.

• One-to-one environment – Students using the module for independent, self-paced learning, can
simply move through the module at their own pace.
• Working in pairs or at centers – Students can take turns answering the questions throughout
the module and in this guide, or they can work together to answer the questions. As students may
have different reading levels, you will want to guide them to provide each group member with an
opportunity to read and comprehend the information before moving on.
• Class environment – If you are leading a group in a one-to-many environment, you can use a
projector and screen or whiteboard to make the module the focus of instruction and discussion. Use
the questions in this guide and a show of hands during each topic to gauge student comprehension.
• Customized instruction – You may also choose to use discrete elements from the module (e.g.,
video, activity, assessment) that fit your timeframe and curriculum. The navigation at the upper left
corner of the module can help you select specific parts once you have reviewed the module. Keep in
mind that many modules take students through a storyline about a character or event. If you start in
the middle of a module, you may want to provide students an overview such as the Module Summary
above.

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Background information about
the topic
Challenge 1—Are you trustworthy?
Credit is a financial tool that allows a person to buy something now and pay for it
in the future. A key to being granted credit from businesses is to be trustworthy—
living up to promises to return borrowed money on time.

A common form of credit is the credit card, which is a card issued by a financial
institution. A credit card allows the holder to purchase goods and services at a
wide range of businesses on credit provided by the financial institution. Credit
cards do not require the holder to present collateral—some item of value that is promised to a lender
should the borrower fail to repay the borrowed money. Credit card holders simply present their cards to
merchants, and the cost of the item is added to the credit card holder’s monthly bill. The credit card
holder then has the option of paying off the entire balance—the total amount borrowed and not repaid—
or a smaller portion of it. The credit card holder pays interest on any balance that is left unpaid.

Challenge 2—Interest and interest rates

Paying off balances as quickly as possible is important with credit cards, because
these cards often charge very high interest rates on outstanding balances. The
interest rates credit cards charge is referred to as the APR, or annual percentage
rate, which includes not just the nominal rate but also the impact of any fees or
other added costs. In general, people with a good record of using credit
responsibly will be able to get a lower rate than people with a poor record. Credit
cards often offer low introductory teaser rates, which may last for several months
or more. After the introductory period, the APR can jump sharply.

Challenge 3—Reading the fine print

Credit cards also typically have a complicated array of different APRs for different
purposes. For example, the rate a credit card charges may vary depending on
whether it was used to purchase goods or services or to transfer balances from
one card to another. Credit cards may also charge a different rate for cash
advances—that is, the borrowing of cash on the credit card account. The rate may
also change—that is, go up—depending on whether or not the credit card user
pays the bill on time or goes over an established credit limit. These higher rates
may apply for several months after the infraction that led to the rate increase.

In addition to having different rates for different purposes, credit card rate are sometimes variable rates
that change over time as conditions in the market fluctuate. Often, variable rates adjust based on changes
to the prime rate, which is the lowest rate lenders charge borrowers. In other words, the rate charged for
ordinary purchases may go up or down if market conditions change. In other cases, a credit card may
offer a fixed rate that never goes up or down.

Credit cards also typically have a schedule of fees that are charged for various reasons. Some cards have
an annual fee that all cardholders must pay yearly. Others charge fees for each new card attached to an
account. Cards may charge fees for certain types of transactions, such as cash advances. There may also
be fees for late payments, charging beyond the credit limit, and other infractions. Such fees will vary.

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Wise consumers carefully examine information that financial institutions must make available for credit
cards they offer. The APR and fees can make a big difference in the actual cost of using different credit
cards.

Challenge 4—Using credit responsibly

Credit card use can be costly, but there are some actions consumers can take to
reduce and sometimes even eliminate the cost of using the card. One key is to pay
off the entire balance of a card whenever possible. By paying off the entire balance
every month and making the payment on time, a credit card user can avoid paying
interest on balances. If paying off the entire balance is not possible, credit card
users should pay as quickly as possible; the more quickly a balance is eliminated,
the lower the total interest charges will be.

Many credit cards have rewards programs that provide users with certain benefits of using the card. For
example, some cards reward borrowers with “cash back”—a specified percentage point returned to the
user on certain purchases. Another commonly found reward is the ability to earn “miles” that can be
redeemed for free or reduced-price airline tickets. Many cards also reward customers with purchase
protection, which provides reimbursement in the event an item purchased with a card is damaged or
stolen.

Challenge 5—Debit vs. credit

A widely used alternative to credit cards is the debit card. This is a card that is
linked to a bank account and that, when used, takes money directly out of the
account to complete the purchase. The user is able to make purchases even if he
or she is not carrying any money.

Key advantages of using a debit card are that there are no fees associated with
using the card to make purchases and there are no bills or late fees. The user is
spending his or her own money, so the cost of using the card is very low.
Of course, credit cards have their advantages, too. They do not require a person to have money in the
bank, so they can be very useful in emergencies. Rewards programs can help defray the cost of keeping
the card.

Using a credit card also gives a person the opportunity to demonstrate creditworthiness. Using a credit
card and paying off the bill is one step a person can take to improve his or her credit score—a number
assigned by a credit monitoring agency that reflects the person’s history of using credit responsibly.
Potential lenders rely on credit scores when deciding whether or not to extend a person credit. Having
good credit can lower borrowing costs when a person goes to buy a house, a car, or other major purchase.
Of course, the reverse is also true: Using credit cards irresponsibly can harm a person’s credit score.
Having poor credit and a low credit score can make borrowing difficult and more expensive.

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Teaching the module
Preparation
It is recommended that you complete the module yourself prior to sharing it with students. This will
allow you to build your background knowledge and experience what students will experience so that you
are better able to anticipate their reactions, questions, and misconceptions.

Key vocabulary

A once-a-year charge that a cardholder pays to use a credit card; charged by

Annual fee
some credit card companies.

Annual percentage The rate of interest charged on borrowed money for an entire year, which
rate (APR) includes the effects of fees and other added costs.

Short for automatic teller machine, a machine at which people can carry
ATM
out banking transactions such as withdrawing or depositing money.

Balance The amount due on a loan (borrowed money).

A cash loan from a credit card, which usually results in higher interest
Cash advance
charges and extra transaction fees.

Something of value a borrower promises to give to a lender if the borrower

Collateral
fails to repay a loan.

A financial tool that allows a person to buy something now and pay for it
Credit
later.

A card issued by a financial institution that gives the holder access to credit
Credit card
for purchases and other transactions.

A number calculated by a credit monitoring agency and assigned to a

Credit score person that reflects the person’s history of borrowing money and paying
back loans.

Creditworthiness A judgment of whether someone is trustworthy enough to borrow money.

A card issued by a bank or other institution that allows money to be

Debit card
withdrawn from an account.

Fee A charge made by the provider of a service on the users of that service.

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 Fixed rate A rate, such as an interest rate, that does not change over time.

Money paid at a specified rate for money that is borrowed, deposited in a

Interest
bank, or owed to a lender.

The rate at which a lender charges a borrower or a financial institution

Interest rate
offers a person who deposits money there.

Prime rate The lowest rate of interest charged by lenders .

A benefit offered to credit card customers: if a purchase is stolen or

Purchase protection damaged within a certain amount of time, the card might cover the cost of
replacing it.

An extra benefit offered by a credit card to users of the card, such as cash
Rewards program
back or airline miles.

A low, introductory rate for a credit card or account used in advertising that
Teaser rate
is meant to attract customers.

Variable rate A rate, such as an interest rate, that changes over time.

Pre-module guiding questions

The following questions can be used to activate students’ prior knowledge and extend their learning
throughout the module.

1. Over 400 years ago, the great playwright William Shakespeare wrote, “Neither a borrower nor a
lender be.” Do you think that statement is still true today? Why or why not?
2. Think about what you’ve heard about the use of credit cards. What’s one good thing you’ve heard
about them? What’s one bad thing you’ve heard about them?
3. Have you seen any advertisements on television or online for credit cards? What did the ads say?
How did they try to attract customers to the particular card being advertised?

Discussion questions/writing prompts

Consider pausing at the end of each module topic to pose questions to students. Suggested questions and
prompts are provided below.

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Challenge 1: How credit works
In this challenge, students take a quiz to determine how trustworthy they are. They then learn what
credit is and how credit cards work.

Challenge 1 questions/prompts

1. Recall the Are You Trustworthy quiz. What do you think trustworthiness has to do with the issue of
credit?
Possible answer: Credit is about lending something to someone on the promise that he or she pay it
back. Without trust, people wouldn’t give or get credit.

2. Think about the advertisement you saw for the Gallacticard. What aspects of the card did the ad
stress? What parts did it downplay?
Possible answer: The ad stressed that you could have what you want without waiting. The ad
downplayed the fact that there are interest charges and fees involved.

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Challenge 2: Interest and interest rates
In this challenge, students learn about interest and interest rates. They also discover that interest rates
are related to a person’s credit score.

Challenge 2 questions/prompts

1. Both the cards you examined had introductory rates that rose sharply after a period of time. What do
you think card companies hope to accomplish by offering these introductory or teaser rates?
Possible answer: They want to get customers signed up for the card—and perhaps even in the habit
of carrying balances on the card.

2. People with better credit scores are often offered lower interest rates on credit cards. Why do you
think they do this?
Possible answer: People with better credit scores are considered to be more trustworthy. They are
more likely to pay their bill on time so companies charge them less interest.

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Challenge 3: Reading the fine print
In this challenge, students learn how to read the fine print in a Schumer Box, which includes important
information about interest rates and fees.

Challenge 3 questions/prompts

1. There is a federal law in the United States that requires credit card companies to provide consumers
with the information you learned about in this portion of the module. Why do you think the
government requires credit card companies to provide this much information?
Possible answer: They want consumers to be informed about what they are getting into by signing up
for a credit card.

2. What might happen to a credit card holder who was not aware of the many different rates and fees
that their credit card charged?
Possible answer: That person might rack up a lot of costs besides just the cost of borrowing money to
make purchases. Interest charges and fees could add hundreds of dollars to that person’s bill.

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Challenge 4: Using credit responsibly
In this challenge, students learn how to use credit responsibly, which includes paying one’s balance on
time and in full whenever possible.

Challenge 4 questions/prompts

1. Remember Targon and Seylah? What are two main lessons you learned from their story?
Possible answer: It is important to pay off the balance entirely or as quickly as possible. It can also
help to have a credit card with a rewards program.

2. Which do you think is most important for saving money—a rewards program or paying off the
balance quickly?
Possible answer: In general, paying off the balance quickly is far more significant in terms of saving
money than a rewards program. In the example, the rewards program led to a savings of $20, but the
possible cost related to not paying off the full balance could be hundreds of dollars or more over time.

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Challenge 5: Debit vs. credit
In their final challenge, students consider the advantages and disadvantages of using debit and credit
cards.

Challenge 5 questions/prompts

1. Think about the information you were provided by the resident of Xanthus. For what kind of person
is a debit card a major advantage compared to credit cards?
Possible answer: People who incur a lot of costs related to credit cards—such as interest payments
and late fees—are in a position to reap most of the benefits of debit cards.

2. How can a credit card user avoid the drawbacks—and take advantage of the benefits—of credit cards?
Possible answer: A credit card user could avoid all the drawbacks by paying off the credit card bill
every month.

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Assessing student learning
Post-test questions, answers, and scoring
Students answer assessment questions that measure their understanding of, and ability to apply, the
module content. Each question is crafted to reveal complete understanding, partial understanding, or
very little to no understanding of the financial literacy skill being measured. Points, ranging from zero to
two, are earned based on answer selections.

In this module, the post-test consists of six questions for a total point value of 10. Students who achieve a
minimum score of seven points will earn a badge reflecting their understanding of the module content.
Students who earn six or fewer points will have the opportunity to retake the test to try to increase their
score and earn a badge.

In Question 1, students explain how credit cards are a form of borrowing money. These
answers are correct because they accurately represent the relationship between each term
and description. If students answer incorrectly, refer to Challenges 1, 3, and 5.

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 In Question 2, students recognize why borrowers pay interest on loans or credit. Option D
is correct because interest is charged when a balance is not paid in full. None of the other
options explains why the $2.80 would be listed as an interest charge. If students answer
incorrectly, refer to Challenges 1, 3, and 4.

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 In Question 3, students identify the regular APR on a credit card offer. The correct answer
represents a correct understanding of what happens when the teaser rate expires—the start
of the Regular Purchase APR. If students answer incorrectly, refer to Challenge 3.

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 In Question 4, students explain why some people pay more interest than others. Options
C, E, and G correctly identify the scenarios that would result in a higher total cost for Zack.
The other options would either result in the same or lower costs for Zack. If students answer
incorrectly, refer to Challenges 3 and 4.

In Question 5, students determine conditions that make credit card interest rates raise or
lower. The correct answers represent an accurate understanding of how different factors
and behaviors affect interest rates paid by credit card customers. If students answer
incorrectly, refer to Challenges 2 and 3.

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 In Question 6, students list ways people use credit wisely. The correct answers reflect an
accurate understanding of the characteristics, benefits, and drawbacks of both credit cards
and debit cards, including the possible availability of purchase protection for credit cards,
the fact that credit cards do not require a purchaser to have funds immediately available,
the availability of cash back with use of a debit card, and the requirement that debit cards
be linked to accounts with sufficient funds for a purchase. If students answer incorrectly,
refer to Challenge 5.

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Extending student learning
The following activities are designed to help students continue their exploration of key concepts. They
are intended to be used after students have completed the module.

Writing prompts/projects
1. Have students create a print or digital brochure that is designed to educate their peers about the
benefits and drawbacks of credit cards. The brochure should use words and images to present both
the pros and cons of using credit cards. It should also provide tips for how a person can maximize the
advantages of credit cards while minimizing the potential drawbacks. Student brochures should
include information about the potential for credit cards to add significant amounts to the costs of
purchases if the user fails to pay the item off quickly. Direct students to online credit card ads and
interest calculators to help them obtain information about current credit card rates and the impact of
making less-than-minimum payments on purchases.
2. Direct students to research and write a brief report on the use of credit cards in the United States.
Students should use online sources to obtain up-to-date data about Americans’ credit card habits. For
example, students may obtain information about what percentage of American adults have credit
cards, per-capita credit card debt, and so on. Student reports should conclude with a statement from
the student about whether he or she believes Americans’ use of credit cards is generally healthy or
generally unwise.

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National standards for financial
literacy
This module is correlated to the National standards for financial literacy from the Council for Economic
Education. Standards are classified as primary or secondary. Primary standards are addressed directly
and thoroughly. Secondary standards are addressed indirectly or partially.

Primary

Buying Goods and Services—Grade 8: People choose from a variety of payment methods in order to
buy goods and services.

Buying Goods and Services—Grade 8: Choosing a payment method entails weighing the costs and
benefits of the different payment options.

Using Credit—Grade 8: People who apply for loans are told what the interest rate on the loan will be.
An interest rate is the price of using someone else’s money expressed as an annual percentage of the
loan principal.

Using Credit—Grade 8: A credit card purchase is a loan from the financial institution that issued the
card. Credit card interest rates tend to be higher than rates for other loans. In addition, financial
institutions may charge significant fees related to a credit card and its use.

Using Credit—Grade 8: Borrowers who use credit cards for purchases and who do not pay the full
balance when it is due pay much higher costs for their purchases because interest is charged monthly.
A credit card user can avoid interest charges by paying the entire balance within the grace period
specified by the financial institution.

Secondary

Using Credit— Grade 8: The longer the repayment period on a loan and the higher the interest rate on
the loan, the larger the total amount of interest charged on a loan.

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Related resources for students
These resources can be used to reinforce or expand upon students’ understanding of key concepts in the
module.

Resource: Credit
Source: ConsumerJungle.org
Description: Student-created articles about a variety of credit topics, plus links to additional sources of
helpful information
Link: http://consumerjungle.org/manage-money/credit

Resource: Know Before You Owe: Credit Cards

Source: Consumer Financial Protection Bureau
Description: Collection of data about the credit card complaints and agreements and a survey of credit
card plans
Link: http://www.consumerfinance.gov/credit-cards/

Resource: How Credit Cards Work and Why It’s So Easy to Fall Into Debt
Source: KQED News
Description: Entertaining and informative video that explains how credit cards work and why they can
often lead people into debt
Link: http://ww2.kqed.org/lowdown/2014/01/21/how-credit-cards-really-work/

Resource: Consumer Information: Credit and Loans

Source: Federal Trade Commission
Description: Provides information about credit and loans and the decisions people need to make
before they apply for a loan or credit card
Link: http://www.consumer.ftc.gov/topics/credit-and-loans

Resource: Credit Reports and Scores

Source: United States Government
Description: Provides information about how to get a credit report, read a credit report, and make
corrections
Link: https://www.usa.gov/credit-reports

Resource: AnnualCreditReport.com
Source: AnnualCreditReport.com
Description: Website established under federal law that entitles each person to one free credit report
each year from each of the three major credit reporting companies—Equifax, Experian, and TransUnion
Link: https://www.annualcreditreport.com/index.action

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Module notes/sources
General
The Credit CARD Act is often called the Bill of Rights for credit card holders. The law is designed to
promote fairness and transparency in lending.
See http://www.consumerfinance.gov/credit-cards/credit-card-act/

© 2016 PwC Charitable Foundation, Inc. The PwC Charitable Foundation, Inc., is a section 501(c)(3) organization that 20
makes charitable contributions to the people of PwC in times of financial hardship, and to nonprofit organizations that
promote education and humanitarianism.