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Money · Ages 10+ · Set A
How credit works, step by step
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Goal: 15 min
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Remember: Credit is borrowing in six written steps: ask, check, agree, use, bill, pay. The limit is the most you can use at once. Paying in full by the due day means no extra here. These are made-up coins.

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Ruth's scarvesRuth, Pia's big sister, sewed scarves for the Lantern Bay festival. Mae sold lovely cloth, and enough for twenty scarves cost 6 coins, but Ruth's coins would come after the festival, and today her purse was empty. She needed to buy first and pay soon. That is called credit: using a lender's coins now and paying later. At the Lantern Bank, step one is to ask, and Ruth asked Mr. Fenn for a credit account. An account is a page in the bank's book with her name on it. Step two is the bank's check, where Mr. Fenn looked at whether she had paid back on time. Step three is to agree. The bank set a limit of 10 coins, the most she can use at once. They agreed the price too: no extra if paid in full by the due day. Step four is to use it, so Ruth picked out cloth worth 6 coins, and the bank paid Mae at once. Now Ruth owed the bank 6. At the festival every scarf sold. Step five is the bill: at month's end an envelope said 6 coins, with a due day that Ruth ringed on her calendar. If the due day goes by, the bank adds a price and notes the late day. Step six is to pay, and Ruth paid all 6 before the due day. Mr. Fenn wrote a tick in her record. Now the limit was open again. "It is not magic," said Ruth. "It is a promise, written down and kept."
1
Join each step to what Ruth does.
  1. 1Ask
  2. 2Check
  3. 3Agree
  4. 4Use
  5. 5Bill
  6. 6Pay
  • Ashe brings the coins before the due day
  • Bshe picks out the cloth
  • Can envelope comes at month's end
  • Da limit and a price are set
  • Easks for a credit account
  • Fthe bank looks at her record
2
Ruth's limit has 10 places. The 6 crossed out are used on cloth, so places are free.
3
On the day Ruth uses her account, who pays Mae for the cloth?
Ruth's purseThe bankPia
4
Ruth used cloth worth 6 coins. At month's end her bill says coins.
5
If Ruth pays the whole 6 by the due day, she pays no extra.
TrueFalse
6
What can happen if the due day goes by?
The bill disappearsThe limit grows to 20The bank adds a price and notes the late day

Order and fix

7
Number the money moves, first to last.
  • Ruth pays the bank
  • The bank pays Mae for the cloth
  • The bill arrives at month's end
  • Ruth sells her scarves at the festival
8
The account is like a magic purse that never runs out.
TrueFalse
9
Circle every thing you would find on Ruth's bill.
What she owes: 6 coinsThe due dayThe limit barThe bank's sealHow many scarves sold
10
Pia says: the bank does its check after Ruth uses the account. Is Pia right?
YesNo
11
Stretch: cloth for 40 scarves costs twice as much, 12 coins. Ruth's limit is 10, so she is coins over.
12
Write what 'a promise, written down and kept' means for Ruth's account.
13
Draw Ruth's bill with the amount, the due day ringed and the limit bar.
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