The big ideaA credit card is not free. It lets us borrow from a bank.
How it works
Nico had no coins with him, so he tapped a card for a hat that cost 4 pretend coins. The hat was not free.
Behind the card is a bank. The bank paid Zed 4 coins right away, and now Nico owes the bank.
A credit card lets us borrow from a bank while we shop. The bank sets a top number of coins, called the limit.
At the month's end a bill lists each thing and its coins. If a bill waits too long, the bank may ask for extra coins.
Borrowing or not?
💳the card🏦the bank pays first🧾the bill
A card is a promise.
Example 1: Who pays the shop?
Nico taps the card.
The bank pays Zed 4 coins right away.
Now Nico owes the bank 4 coins.
Example 2: Read the bill
The bill says: One blue hat, 4 coins.
Nico pays the bank 4 coins.
The bill is paid.
Example 3: Is it borrowing?
Spending coins from your jar uses your own coins, so nothing is owed.
Tapping a card means the bank pays first, so you owe the bank.
A bun now, paid on Friday, is borrowing too.
Example 4: A second thing on the bill
Say Nico also taps for a second hat that costs 4 coins.
4 + 4 = 8
The next bill would list 8 coins.
Words to know
credit card
A card that lets us borrow from a bank while we shop.
owe
Must pay those coins back.
limit
The top number of coins the bank lets you borrow.
bill
A paper that lists each thing and its coins.
Watch out
A card is not magic and not free. It is a promise to pay back, and every tap is a little promise.
The coins behind the card are the bank's. The card itself is only plain plastic.
The limit is the top number of coins you can borrow, and not more.
A bill that waits too long can cost extra.
Try it
Nico taps a card for a hat. Who pays Zed first?
Is spending coins from your own jar borrowing?
What does a bill list?
Answers: 1. The bank · 2. No · 3. Each thing and its coins
Try at homeWith a grown-up, find one thing your family borrows and gives back, like a library book, and say what happens if it is late.
For grown-upsTogether, find one thing your family borrows and gives back, like a library book, and say what happens if it is late. This episode explains cards in general words with pretend coins, and names no bank or brand.
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