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TEACHER LESSON PLAN
Lesson 5-4: Financial Service Providers
©2014 National Endowment for Financial Education www.hsfpp.org Lesson 5-4: Financial Service Providers
High School Financial Planning Program 1 June 2014
OVERVIEW
Travel a few miles from your home, and you will see
many places where you can cash a paycheck, open a
savings account, or get a money order. It can be to your
advantage to choose a bank or credit union for your
routine business so you have a trusted place to turn to
when you’re ready for a credit card or loan. But there
may be times when you choose to use services provided
by other businesses.
In this lesson you will learn about the businesses that
provide financial services. Use what you learn to be
informed about fees and customer service options when
deciding where you conduct your business.
PREPARATION
Order a Module 5 Student Guide for each
student. (The Guide is available to download.)
Preview the lesson PowerPoint presentation,
learning tasks, and the Module 5 Student
Guide, particularly pages 25-30.
Print or download the Student Learning Plan
for this lesson so each student has a copy.
If Internet access is limited, gather information
for Learning Task 2 and Task 3.
Consider creating a list of nearby financial
businesses that provide banking services,
including grocery stores and Check Cashing
businesses.
Decide whether or not to facilitate the optional
Payday Lending Learning Task.
WHAT YOU WILL NEED
Module 5 Student Guide (pages 25-30)
PowerPoint Presentation 5-4
Student Learning Plan 5-4
Activity 5.6: What do They Offer?
Challenge 5-B: Which is Best for Me?
Internet access
Sample fee schedules and disclosure
statements or websites for local financial
service businesses (Learning Task 3)
Task: Payday Lending (optional)
Task: Take Money on the Road (Taking It
Home)
NOTES:
Approximate time: 45 minutes (minimum) - 90 minutes (with extension activities)
Resources:
Consumer Financial Protection Bureau (CFPB), www.consumerfinance.gov. Tips for consumer complaints.*
Federal Deposit Insurance Corporation (FDIC), www.fdic.gov. Consumer protection tips.
Federal Reserve Education website, www.federalreserveeducation.org. Teaching resources.*
National Credit Union Administration (NCUA), www.mycreditunion.gov. Consumer tips, financial tools.
LEARNING OUTCOMES
In this lesson students will learn about
services provided by various financial service
providers. Along the way they will:
Give examples of services provided by
different types of financial institutions.
Review guidelines for using banking
services.
Discuss criteria to consider when
choosing where to use banking services.
Students will use what they learn to select a
financial service provider.
TEACHER LESSON PLAN
Lesson 5-4: Financial Service Providers
©2014 National Endowment for Financial Education www.hsfpp.org Lesson 5-4: Financial Service Providers
High School Financial Planning Program 2 June 2014
Learning Tasks Teaching Notes Materials
1. Brainstorm a list of
personality
characteristics and
traits you look for in a
good friend. Focus on
actions or
characteristics and not
on how that person
would look.
PROCEDURE TIME ESTIMATE: 5 minutes
Have students brainstorm a list of characteristics they would
look for in an ideal friend or life partner. Tell them to focus on
personality characteristics rather than just visual traits. For
example, they would write “friendly” or “ready with a smile” rather
than “dazzling white teeth.” Set a two- or three-minute time limit.
As students brainstorm a list, explain that many people spend a
lot of time looking for that perfect person with whom to spend the
rest of their lives. We trust that person with our lives. To a lesser
degree, we place our trust in a financial institution when we select
one to help us manage and grow our finances, but we don’t always
put time and effort in choosing one that is the right long-term
financial partner. The types of characteristics they may look for in a
personal relationship could also apply to their financial relationship.
Now ask students to cross off any traits that would NOT apply to
a financial institution. With the whole class, review what is left to
create a master list.
Note: This activity should promote initial laughter but as they work
on this, students will realize that different financial institutions have
different cultures, services, target audiences, etc., and that
analyzing these characteristics can help them identify what they
think is important in a financial institution. Sample traits: friendly,
responsive, local, worldly (becomes “global” for a bank), funny,
trustworthy, accomplished, smart, trendy, tech savvy.
Alternate Activity: Have students brainstorm the personal and
financial impacts of NOT having a bank account. (accounts not
protected by insurance, rent/mortgage application, theft possibility,
check cashing fees, potential credit impacts, difficulty paying bills or
mailing funds for bill/gift, etc.)
EXTENSION: In teams of two or three, challenge the student to list
as many local banks and credit unions as possible in a few minutes.
[Slide 2] Transition into the lesson by telling the students that
they will learn about the differences and similarities of places where
they can carry out their financial business. Preview the Learning
Outcomes in the Student Learning Plan. By the end of this lesson,
the students should be able to select a financial service provider.
Module 4 Student
Guide
Student Learning
Plan
SLIDE
2 – Preview
TEACHER LESSON PLAN
Lesson 5-4: Financial Service Providers
©2014 National Endowment for Financial Education www.hsfpp.org Lesson 5-4: Financial Service Providers
High School Financial Planning Program 3 June 2014
Learning Tasks Teaching Notes Materials
2. What’s the
difference between a
bank and a credit
union? If you don’t
have a bank account,
where can you cash
your paycheck? Work
with a team to learn
about a business that
provides financial
services, and share
what you learned with
your classmates.
PROCEDURE TIME: 15-20 minutes
[Slide 3] Point out that consumers have several options when
they need to cash paychecks, pay bills, or store their money. The
options displayed in the slide offer similar services in different ways.
Arrange students into teams, and assign each topic to at least
one team. Tell the teams that they have 5-10 minutes to learn
about their assigned type of business so they can teach their
classmates about the financial services the provider offers to
consumers. Arrange for each team to assign a recorder to outline
the team’s findings and a reporter to report findings to the whole
class, with or without visual aids. Keep students on a tight schedule
to focus on their work. Suggest that the team members divide
duties to locate specific information. (Note: If Internet access isn’t
available, consider printing information from a service provider’s
websites or at least one other credible resource.)
[Slide 4, Student Guide, pages 26-29] Have students work in
small groups to use the information in the Student Guide and at
least one other trustworthy resource so they can share the following
about their assigned service providers:
One- or two-sentence description of the business and
reference to at least one specific local example.
List of typical consumer finance services provided by the
business.
Thirty- to sixty-second explanation of how consumers use the
services, including examples of how teens (or their families)
might use the services.
Arrange for each team to report findings to the whole group
either with or without visual aids. Debrief by asking students to
compare similarities and differences of the providers. Fill in any
gaps to ensure the students have accurate information about the
services that are provided, whether or not fees are charged for
services, and how services are or are not regulated.
STUDENT GUIDE
Pages 26-29
SLIDES
3 – What’s the
Difference?
4 – Teach Your Peers
ACTIVITY
Internet access
(opt) access to
PowerPoint for
presentation or
poster materials
TEACHER LESSON PLAN
Lesson 5-4: Financial Service Providers
©2014 National Endowment for Financial Education www.hsfpp.org Lesson 5-4: Financial Service Providers
High School Financial Planning Program 4 June 2014
Learning Tasks Teaching Notes Materials
3. It would have helped
Jason to better
understand the fees a
bank charges for
services and penalties.
It should never be a
mystery!
Review the sample fee
schedule or disclosure
statement. Document
at least five examples
of fees and under what
circumstances those
fees are charged.
Learn about the
services a business
provides as you
complete Activity 5.6:
What Do They Offer?
PROCEDURE TIME: 10-15 minutes
[Slide 5] Have students work in small groups. Either arrange for
Internet access or provide the students with sample disclosure
statements and fee schedules from different banks. Review the
directions with the students. (This is an opportunity to guide
students to use scanning skills to look for specific fee information in
business literature.)
Directions: It is your right to get a copy of your financial institution’s
deposit account agreement and disclosure statement which
outlines information about terms, fees, and interest rates for the
accounts offered by the financial institution. Review the sample fee
schedule, deposit account agreement, and disclosure statement.
Document at least five instances of fees and under what
circumstances those fees are charged. Ask the students the
following question; tell them to be prepared to share their findings
with the whole class.
Do you think the fees and fee conditions are reasonable?
Point out the value of knowing the fees charged for certain types
of accounts and the circumstances under which those fees can be
applied. It’s also important to know the different bank policies that
can apply when depositing funds or withdrawing funds.
Give students three to five minutes to work independently or in
pairs to complete Activity 5.6: What Do They Offer? as they locate
and document different fees and the circumstances under which
fees are incurred. If time allows, have the students report out on
one or two findings. Ask the class to identify fees they can avoid and
some strategies they can use to avoid them.
NOTES: Some fees imposed by financial institutions (bounced check
fees, ATM fees, etc.) can be avoided whereas other (monthly
account fees, check printing fees, etc.) cannot. You may need to
discuss the various fees and when it makes sense to pay a fee for
the services provided by a financial institution and when it does not.
STUDENT GUIDE
Page 27
SLIDE
5 – Read the Fine
ACTIVITIES
Sample account
disclosure
statements and/or
sample fee schedules
from local financial
businesses (or)
access to websites of
financial businesses
Activity 5.6: What Do
They Offer?
[The instructor will
need to decide
whether or not to
facilitate this learning
task based on local
and state situations.]
PROCEDURE TIME: 10 minutes
Optional: If payday lending is allowed in your state, consider
facilitating this learning task to inform students of fees and how
payday lending works. As of January 2015, 18 states and the
District of Columbia prohibit extremely high-cost payday lending.
Source: Consumer Federation of America, PayDay Loan Consumer
Information, www.paydayloaninfo.org.
STUDENT GUIDE
Page 27
SLIDES
6 – Payday Loan
7 – Payday Loan …
Good Choice?
ACTIVITY
Task: Payday Lending
TEACHER LESSON PLAN
Lesson 5-4: Financial Service Providers
©2014 National Endowment for Financial Education www.hsfpp.org Lesson 5-4: Financial Service Providers
High School Financial Planning Program 5 June 2014
Learning Tasks Teaching Notes Materials
[Slide 6] In some states, consumers use payday lending
businesses to receive cash advances when cash is needed before
the next payday. Consumers give the payday lender a post-dated
check in return for cash. The amount borrowed is usually expected
to be repaid, along with fees and interest, when the next paycheck
is received.
[Slide 7] Use this slide to illustrate the high costs of payday loans.
Note that the interest shown is for a two- or four-week loan period
and should be converted to an annual percentage rate before
calculating the interest. For the examples, use the simple interest
formula. (Note: Calculation notes are provided in the Payday
Lending Task document.)
4. With so many
options, what
suggestions do you
have for someone who
needs to use financial
services? Recommend
criteria that a teen or a
young adult should
consider when
deciding on a provider.
PROCEDURE TIME: 5-10 minutes
[Slide 8] Guide the students to think about convenience factors
and user fees when deciding where they will use financial services.
Challenge the students to create a mnemonic device that teens or
young adults can use as a memory aid when they are deciding
where to cash checks, borrow cash, make payments, etc. The
mnemonic should include at least five criteria to consider.
(Mnemonic suggestions: acronym, limerick, graphic icons, or
memorable phrases.)
As time allows, arrange for students to verbally or visually share
their mnemonic tools. Point out that these will be useful as they
complete the challenge activity.
STUDENT GUIDE
Page 29
SLIDE
8 – Services That
Matter
5. To make sure a
credit union is the best
fit for her, Brianna
should really use the
DECIDE steps to
evaluate her needs
and to compare
financial service
provider options.
Complete Challenge
5-B: Which is Best
for Me? to select a
service provider.
PROCEDURE In- class or out-of-class assignment
[Slide 9] Assign the students to independently complete
Challenge 5-B: Which is Best for Me?
Review the directions with the students. Tell students to perform
this exercise even if they already have an account with a financial
bank or credit union as an exercise to make sure it is the best
personal fit. Provide guidance to students as they complete the
activity. Encourage the students to include their own criteria for
comparison.
You may have students collect information from different
financial service providers or businesses prior to this activity.
STUDENT GUIDE
Page 30
SLIDE
9 – Challenge
ACTIVITY
Challenge 5-B: Which
is Best for Me?
TEACHER LESSON PLAN
Lesson 5-4: Financial Service Providers
©2014 National Endowment for Financial Education www.hsfpp.org Lesson 5-4: Financial Service Providers
High School Financial Planning Program 6 June 2014
Learning Tasks Teaching Notes Materials
REFLECTION:
Where do I keep my
money now and why?
Is it safe? Is it growing?
Can I track it?
PROCEDURE In- class or out-of-class assignment
[Slide 10] Ask the students to reflect on where they currently
keep their money and to analyze the situation based on what they
have learned about financial service options.
SLIDE
10 - Reflection
TAKING IT HOME
Planning on travelling?
To visit new places?
Gather information
about the variety of
ways to access the
cash or to purchase
things on the road.
PROCEDURE In- class or out-of-class assignment
Distribute the Take Money on the Road Task to provide students
with more instructions for this task. NOTE: You can use this as a
classroom extension having students work in five different groups,
each one researching a specific payment method. You may need to
select a specific credit card or financial institution to make it easier
for students to research the information.
ACTIVITY
Task: Take Money on
the Road
FURTHER STUDY:
Consider your future
needs for financial
services! What
financial services
would you need for
different life events?
PROCEDURE In- class or out-of-class assignment
Guide students to create criteria to use as they select an
appropriate financial service or business to help address the
financial needs for each of the following life events: college
education, starting a business, getting married, having children,
buying a home, retiring.
TAKING IT HOME Planning on travelling? To visit new places? Or perhaps moving away for college? Gather information about
the variety of ways you and your family can access cash or make purchases while on the road.
FURTHER STUDY Consider your future needs for financial services! Which financial services would you need for different life
events? Create criteria you would use to select an appropriate financial service or business to help address
the financial needs for any of the following life events: college education, starting a business, getting married,
having children, buying a home, or retiring.
*RESOURCE NOTES
The Consumer Financial Protection Bureau (aka CFPB or Bureau) began Consumer Response operations in
2011 and became the first federal agency solely focused on consumer financial protection. Collecting,
investigating, and responding to consumer complaints are integral parts of the CFPB’s work. The
www.consumerfinance.gov website provides tips to help students and their families make informed decisions
about paying for college and guidance for consumer complaints related to financial markets.
Each of the 12 branches of the Federal Reserve System (aka FRS or The FED) offers education resources and
helpful consumer publications. At www.federalreserveeducation.org search for lessons, publications, activities,
and videos related to financial services and other specific personal finance topics.
0
Lesson 5-4: Financial Service Providers
©2014 National Endowment for Financial Education | www.hsfpp.org
High School Financial Planning Program
Display this slide as you introduce the lesson and opening task.
Have students brainstorm a list of characteristics they would look for in an ideal friend or life
partner. Tell them to focus on personality characteristics rather than just visual traits. For
example, they would write “friendly” or “ready with a smile” rather than “dazzling white teeth.”
Set a two- or three-minute time limit.
As students brainstorm a list, explain that many people spend a lot of time looking for that
perfect person with whom to spend the rest of their lives. We trust that person with our lives.
To a lesser degree, we place our trust in a financial institution when we select one to help us
manage and grow our finances, but we don’t always put time and effort in choosing one that is
the right long-term financial partner. The types of characteristics they may look for in a
personal relationship could also apply to their financial relationship.
Now ask students to cross off any traits that would NOT apply to a financial institution. With
the whole class, review what is left to create a master list.
Note: This activity should promote initial laughter but as they work on this, students will realize that
different financial institutions have different cultures, services, target audiences, etc., and that
analyzing these characteristics can help them identify what they think is important in a financial
institution. Sample traits: friendly, responsive, local, worldly (becomes “global” for a bank), funny,
trustworthy, accomplished, smart, trendy, tech savvy.
Alternate Activity: Have students brainstorm the personal and financial impacts of NOT having a
bank account. (accounts not protected by insurance, rent/mortgage application, theft possibility,
check cashing fees, potential credit impacts, difficulty paying bills or mailing funds for bill/gift, etc.)
EXTENSION: In teams of two or three, challenge the student to list as many local banks and credit
unions as possible in a few minutes.
High School Financial Planning Program Lesson 5-4: Financial Service Providers
©2014 National Endowment for Financial Education | www.hsfpp.org 1
Transition into the lesson by telling the students that they will learn about the
differences and similarities of places where they can carry out their financial
business. Preview the Learning Outcomes in the Student Learning Plan. By the
end of this lesson, the students should be able to select a financial service
provider.
High School Financial Planning Program Lesson 5-4: Financial Service Providers
©2014 National Endowment for Financial Education | www.hsfpp.org 2
Student Guide, pages 26-29
Point out that consumers have several options when they need to cash
paychecks, pay bills, or store their money. The options displayed in the slide
offer similar services in different ways.
Arrange students into teams, and assign each topic to at least one team. Tell
the teams that they have 5-10 minutes to learn about their assigned type of
business so they can teach their classmates about the financial services the
provider offers to consumers. Arrange for each team to assign a recorder to
outline the team’s findings and a reporter to report findings to the whole
class, with or without visual aids. Keep students on a tight schedule to focus
on their work. Suggest that the team members divide duties to locate
specific information. (Note: If Internet access isn’t available, consider
printing information from a service provider’s websites or at least one other
credible resource.)
High School Financial Planning Program Lesson 5-4: Financial Service Providers
©2014 National Endowment for Financial Education | www.hsfpp.org 3
Student Guide, pages 26-29
Have students work in small groups to use the information in the Student
Guide and at least one other trustworthy resource so they can share the
following about their assigned service providers:
– One- or two-sentence description of the business and reference to at least
one specific local example.
– List of typical consumer finance services provided by the business.
– Thirty- to sixty-second explanation of how consumers use the services,
including examples of how teens (or their families) might use the services.
Arrange for each team to report findings to the whole group either with or
without visual aids. Debrief by asking students to compare similarities and
differences of the providers. Fill in any gaps to ensure the students have
accurate information about the services that are provided, whether or not fees
are charged for services, and how services are or are not regulated.
High School Financial Planning Program Lesson 5-4: Financial Service Providers
©2014 National Endowment for Financial Education | www.hsfpp.org 4
Student Guide, page 27
Have students work in small groups. Either arrange for Internet access or provide the students
with sample disclosure statements and fee schedules from different banks. Review the
directions with the students. (This is an opportunity to guide students to use scanning skills to
look for specific information in business literature.)
Directions: It is your right to get a copy of your financial institution’s deposit account
agreement and disclosure statement which outlines information about terms, fees, and
interest rates for accounts offered by the financial institution. Review the sample fee schedule,
deposit account agreement, and disclosure statements. Document at least five instances of
fees and under what circumstances those fees are charged. Ask the students,
– Do you think the fees and fee conditions are reasonable? Be prepared to share your
findings with the class.
Point out the value of knowing the fees charged for certain types of accounts and the
circumstances under which those fees can be applied. It’s also important to know the different
bank policies that can apply when depositing funds or withdrawing funds.
Give students three to five minutes to work independently or in pairs to complete Activity 5.6:
What Do They Offer? as they locate and document different fees and the circumstances under
which fees are incurred. If time allows, have the students report out on one or two findings.
Ask the class to identify fees they can avoid and some strategies they can use to avoid them.
NOTES: Some fees imposed by financial institutions (bounced check fees, ATM fees, etc.) can be
avoided whereas other (monthly account fees, check printing fees, etc.) cannot. You may need to
discuss the various fees and when it makes sense to pay a fee for the services provided by a
financial institution and when it does not.
High School Financial Planning Program Lesson 5-4: Financial Service Providers
©2014 National Endowment for Financial Education | www.hsfpp.org 5
Student Guide, page 27
Optional: If payday lending is allowed in your state, consider facilitating this
learning task to inform students of fees and how payday lending works. As of
January 2015, 18 states and the District of Columbia prohibit extremely high-cost
payday lending. Source: Consumer Federation of America, PayDay Loan Consumer
Information, www.paydayloaninfo.org.
In some states, consumers use payday lending businesses to receive cash
advances when cash is needed before the next payday. Consumers give the
payday lender a post-dated check in return for cash. The amount borrowed is
usually expected to be repaid, along with fees and interest, when the next
paycheck is received.
High School Financial Planning Program Lesson 5-4: Financial Service Providers
©2014 National Endowment for Financial Education | www.hsfpp.org 6
Student Guide, page 27
Use this slide to illustrate the high costs of payday loans. Note that the interest
shown is for a two- or four-week loan period and should be converted to an
annual percentage rate before calculating the interest. For the examples, use
the simple interest formula. (Note: Calculation notes are provided in the
Payday Lending Task document.)
7
Lesson 5-4: Financial Service Providers
©2014 National Endowment for Financial Education | www.hsfpp.org
High School Financial Planning Program
Student Guide, page 29
Guide the students to think about convenience factors and user fees when
deciding where they will use financial services. Challenge the students to
create a mnemonic device that teens or young adults can use as a memory aid
when they are deciding where to cash checks, borrow cash, make payments,
etc. The mnemonic should include at least five criteria to consider. (Mnemonic
suggestions: acronym, limerick, graphic icons, or memorable phrases.)
As time allows, arrange for students to verbally or visually share their
mnemonic tools. Point out that these will be useful as they complete the
challenge activity.
High School Financial Planning Program Lesson 5-4: Financial Service Providers
©2014 National Endowment for Financial Education | www.hsfpp.org 8
Student Guide, page 30
Assign the students to independently complete Challenge 5-B: Which is Best
for Me?
Review the directions with the students. Tell students to perform this exercise
even if they already have an account with a bank or credit union as an exercise
to make sure it is the best personal fit. Provide guidance to students as they
complete the activity. Encourage the students to include their own criteria for
comparison.
You may have students collect information from different financial service
providers prior to this activity.
High School Financial Planning Program Lesson 5-4: Financial Service Providers
©2014 National Endowment for Financial Education | www.hsfpp.org 9
Ask the students to reflect on where they currently keep their money and to
analyze the situation based on what they have learned about financial service
options.
High School Financial Planning Program Lesson 5-4: Financial Service Providers
©2014 National Endowment for Financial Education | www.hsfpp.org 10
High School Financial Planning Program Lesson 5-4: Financial Service Providers
©2014 National Endowment for Financial Education | www.hsfpp.org 11
STUDENT LEARNING PLAN
Lesson 5-4: Financial Service Providers
©2014 National Endowment for Financial Education www.hsfpp.org Lesson 5-4: Financial Service Providers
High School Financial Planning Program June 2014
OVERVIEW
Travel a few miles from your home, and you will see
many places where you can cash a paycheck, open a
savings account, or get a money order. It can be to
your advantage to choose a bank or credit union for
your routine business so you have a trusted place to
turn to when you’re ready for a credit card or loan. But
there may be times when you choose to use services
provided by other businesses.
In this lesson you will learn about the businesses that
provide financial services. Use what you learn to be
informed about fees and customer service options
when deciding where you conduct your business.
LEARNING TASKS These tasks match pages 25-30 in Student Guide 5.
__ 1. Brainstorm a list of personality characteristics and traits you look for in a good friend. Focus on actions
or characteristics and not on how that person would look.
__ 2. What’s the difference between a bank and a credit union? If you don’t have a bank account, where
can you cash your paycheck? Work with a team to learn about a business that provides financial
services, and share what you learned with your classmates.
__ 3. It would have helped Jason to better understand the fees a bank charges for services and penalties. It
should never be a mystery! Review the sample fee schedule or disclosure statement. Document at
least five examples of fees and under what circumstances those fees are charged.
Learn about the services a business provides as you complete Activity 5.6: What Do They Offer?
__ 4. With so many options, what suggestions do you have for someone who needs to use financial services?
Recommend criteria that a teen or a young adult should consider when deciding on a provider.
__ 5. To make sure a credit union is the best fit for her, Brianna should really use the DECIDE steps to
evaluate her needs and to compare financial service options. Complete Challenge 5-B: Which is
Best for Me? to select a service provider that is right for you.
TAKING IT HOME
Planning on travelling? To visit new
places? Or perhaps moving away for
college? Gather information about the
variety of ways you and your family can
access cash or make purchases while
on the road.
FURTHER STUDY
Consider your future needs for financial services! Which financial
services would you need for different life events? Create criteria you
would use to select an appropriate financial service or business to
help address the financial needs for any of the following life events:
college education, starting a business, getting married, having
children, buying a home, or retiring.
LEARNING OUTCOMES
In this lesson you will learn about services
provided by various financial service
providers. Along the way you will:
Give examples of services provided by
different types of financial institutions.
Review guidelines for using banking
services.
Discuss criteria to consider when
choosing where to use banking services.
Use what you learn today to select a
financial service provider.
.
Activity 5.6: What Do They Offer?
©2014 National Endowment for Financial Education www.hsfpp.org Activity 5.6: What Do They Offer?
High School Financial Planning Program June 2014
NAME: DATE:
Directions:
Visit the website of a financial service provider in your community to learn about services they
provide for customers.
Name of financial service provider:
What are the minimum balance requirements for checking and savings accounts?
Checking:
Savings:
What is the current interest rate earned on a basic savings account?
Banks offer other types of services such as safe deposit boxes for customers to store valuable
documents. List at least two other types of non-account services that the provider makes available to
customers, either for a fee or at no cost.
1.
2.
Task: Payday Lending
©2014 National Endowment for Financial Education www.hsfpp.org Task: Payday Lending
High School Financial Planning Program June 2014
Teacher Notes
If payday lending is an option in your state, consider facilitating this activity to inform students of fees and
how payday lending works. As of January 2015, 18 states and the District of Columbia prohibit extremely
high-cost payday lending.
Source: Consumer Federation of America, PayDay Loan Consumer Information, www.paydayloaninfo.org.
[Slide 6] Display the Payday Loan slide as you explain how payday lending works. In some states,
consumers use payday lending businesses to receive cash advances when cash is needed before the next
payday. Consumers give the payday lender a post-dated check in return for cash. The amount borrowed is
usually expected to be repaid, along with fees and interest, when the next paycheck is received.
[Slide 7] Use the Payday Loan … Good Choice? slide to have the students calculate the cost of payday
loans. Note that the interest shown is for a two- or four-week loan period and should be converted to an
annual percentage rate before calculating the interest. For these examples, use the simple interest formula.
Calculation Notes - Payday Loan Calculations
Convert short-term interest to annual percentage rate (APR):
15% @ 2 weeks x 26 = 390% APR
12% @ 4 weeks x 13 = 156% APR
10% @ 2 weeks x 26 = 260% APR
[or use ratios for conversion, for example: 2 weeks/52 weeks = .15/X]
Convert short-term to percentage of year for interest formula:
2 weeks/52 weeks = .038462 year
4 weeks/52 weeks = .076923 year
Use the simple interest rate formula to calculate interest owed plus principal (round up to nearest dollar):
Principal x Rate (annual) x Time (year) = Interest Principal + Interest = Total Amount Due
$ 500 x 3.9 x .038462 = $ 75 $ 500 + $ 75 = $ 575 due in two weeks
$ 300 x 1.56 x .076923 = $ 36 $ 300 + $ 36 = $ 336 due in four weeks
$ 1,000 x 2.6 x .038462 = $100 $1,000 + $100 = $1,100 due in two weeks
Extension
Brainstorm alternate options rather than using an expensive cash-advance option. Potential responses:
– Build up an emergency/contingency fund to cover unexpected short-falls rather than borrow money.
– Increase income or reduce expenditures to prevent need to pay expenses from future paychecks.
– Seek less expensive forms of loans such as local bank.
Ask students how much a person will pay in interest and fees if s/he was in the habit of borrowing
$500 from the payday lender every two weeks for the entire year.
Answer: 26 instances of borrowing at $75 interest owed each time = $1,950 total interest paid.
As time allows, ask students for ideas on how that amount can be put to better use.
Task: Payday Lending
©2014 National Endowment for Financial Education www.hsfpp.org Task: Payday Lending
High School Financial Planning Program June 2014
NAME: ________________________________________ DATE: _____________
Directions:
1. For each amount of money borrowed (principal) at a payday lending business, calculate the annual
percentage rate (APR) and total amount owed at on the date the loan is due to be repaid.
Principal Time Interest APR Total Owed
$500 (rent payment) 2 weeks 15%
$300 (car loan
payment) 4 weeks 12%
$1,000
(pay household and
credit card bills)
2 weeks 10%
2. Brainstorm at least two other options rather than using an expensive cash-advance option.
3. How much will a person pay in interest and fees if s/he was in the habit of borrowing $500 from the
payday lender every two weeks for the entire year? How can that amount be put to better use?
Task: Take Money on the Road
©2014 National Endowment for Financial Education www.hsfpp.org Task: Take Money on the Road
High School Financial Planning Program June 2014
NAME: DATE:
Directions:
1. Think of a place you or your family may travel to within the next five years.
Travel Location:
2. Now research the fees, convenience, interest rate, exchange rate surcharge, and availability of
each of the following options.
Consideration Credit Card Credit Card
Cash Advance Prepaid
Credit Card Debit Card Cash
Fees
Interest Rate
Exchange
Rate
Surcharge
Spending
Limit
Availability
Convenience
Advantage
Disadvantage
3. Based on your research, which option would you use to access cash or make purchases on your
future trip and why?
Challenge 5-B: Which is Best for Me?
©2014 National Endowment for Financial Education www.hsfpp.org Challenge 5-B: Which is Best for Me?
High School Financial Planning Program June 2014
NAME: DATE:
For this challenge task, use what you have learned in Lesson 1-3: Decisions and Lesson 5-4: Financial
Service Providers to make a thoughtful decision about working with at least one financial provider for
your banking needs. Specifically, use the DECIDE model to select a financial institution with services
that are right for you. Make sure to review the required criteria as you are comparing options.
Directions:
1. Apply what you have learned about financial providers and criterion-based decision making as you
complete this challenge. Preview the criteria listed in the Scoring Guide to plan your work.
2. Of the types of financial providers discussed in Module 5, what are the specific features and
criteria that would help you decide where to do your banking? Why? Use the DECIDE steps to
choose financial services and tools that are most useful to you.
3. Use the chart below or create a separate document to summarize your decision-making process.
Review the six DECIDE action steps to guide your work. Your actions should take into consideration
your current circumstances and values.
3. Self-assess your work using the Scoring Guide.
DECIDE Steps My Situation
1 Define your goal.
2 Establish your criteria.
3 Choose three good
options.
4 Identify the pros and
cons of the options.
5 Decide what’s best.
6 Evaluate the results.
Challenge 5-B: Which is Best for Me?
©2014 National Endowment for Financial Education www.hsfpp.org Challenge 5-B: Which is Best for Me?
High School Financial Planning Program June 2014
NAME: DATE:
Required Criteria Status
Content
1. In one sentence you state what you want to achieve as a result of the
decision-making process. acceptable not acceptable
2. Outcome involves a decision about using at least one type of financial
service provider or a combination of several providers. acceptable not acceptable
3. You justify how the decision and outcome relates to your current
circumstances and values. acceptable not acceptable
4.
Summary lists at least three criteria for an acceptable outcome,
including the features and services you absolutely must have as well as
what you would like to have or will not accept.
acceptable not acceptable
Option Status Rating Key: “A” = Acceptable / “NA” = Not Acceptable Option
A
Option
B
Option
C
5. Summary includes details about three possible options, including
specific features and services.
6. You devise a way to illustrate how well each option matches your criteria.
7. You point out the solution that you have chosen. acceptable not acceptable
8. You justify why the chosen option was selected. acceptable not acceptable
9. You choice is logical based on the known circumstances, stated criteria,
and potential to achieve the desired outcome. acceptable not acceptable
10. You summarize what you do and don’t like about your choice and justify
any modifications that were made in the purpose, criteria, or solutions. acceptable not acceptable
General
11. Content is clearly stated with distinct detail. acceptable not acceptable
12. Documentation is neat and easy to read. acceptable not acceptable
13. Information about each option is accurate or can be verified. acceptable not acceptable
Feedback: Score: _______ /_______