A great opener to your Types of Credit unit. Start by asking your students to rank from largest to smallest the various types of consumer debt:

• Credit Cards
• Mortgages
• Auto Loans
• Student Loans

—————-

Answer and visual below (from Visual Capitalist and Equifax): $12.4 trillion (as of August 2016)

Questions for your students:

• Which of the loans above involve an asset that a lender can recover if you don’t pay your loan back?
• Which loan type above involves an asset that depreciates (decreases in value) over time?
• Which loan type above involves an asset that appreciates over time?
• Which loan type do you think has the lowest interest rate? highest interest rate?

_____________

Our new Types of Credit unit has received rave reviews for its engaging approach to teaching students about credit.

About the Author

Tim Ranzetta

Tim's saving habits started at seven when a neighbor with a broken hip gave him a dog walking job. Her recovery, which took almost a year, resulted in Tim getting to know the bank tellers quite well (and accumulating a savings account balance of over $300!). His recent entrepreneurial adventures have included driving a shredding truck, analyzing executive compensation packages for Fortune 500 companies and helping families make better college financing decisions. After volunteering in 2010 to create and teach a personal finance program at Eastside College Prep in East Palo Alto, Tim saw firsthand the impact of an engaging and activity-based curriculum, which inspired him to start a new non-profit, Next Gen Personal Finance.

More posts by Tim