Avoiding Credit Blunders

Suggested Target Age: High School

Topics Covered: responsible use of credit; common credit blunders

Time Required: 45 minutes

What Will the Students Learn?

  • That it’s important to read the fine print on credit card offers
  • What some common credit card fees are (e.g., over-the-limit fee, late fees)
  • Tips for responsible use of credit

State Content Standards Key
California: Career Technical Education Model Curriculum: B11.3, B11.4, C6.2
Florida: Social Studies: SS.D.1.4
Indiana: Economics: 8.4.10
Virginia: Economics Education and Financial Literacy: Objectives 5,6,8,9,10,11,12,13,14

Materials Needed:

  • Script for the skit, “Dominic Dives into Debt”
  • Props needed for the skit (table; envelopes; fake TV; (optional) two radios or stereos and two CD’s – one with movie clips and the other with any music; something green to represent an electronic device – an actual electronic device or a piece of paper; phone)
  • (Optional) an LCD projector and computer connected to the Internet

NOTE: This lesson does not require computers and Internet access, though if you want to do the optional closing activity, the instructor will need a computer with Internet access and an LCD projector.

Teacher Preparation:

1. Read through the script of “Dominic Dives into Debt”
2. BEFORE this lesson, select 4-5 students to play the different roles in the skit. As instructor, you may want to play the lead role of Dominic. Make sufficient copies of the script and PRACTICE the skit with the students some time before the lesson.

Lesson Plan:

1. Gather the students together in the classroom and tell them that today they are going to be learning about credit and debt.

2. With the pre-selected students, perform the “Dominic Dives Into Debt” skit

3. When the skit is finished, thank the actors and have them return to their seats.

4. Now ask the class the questions below and keep a list of the answers on the blackboard or chart paper.

  • What were some of the mistakes that Dominic made with his credit card?
  • How about when he signed up for a credit card?
  • How about when he made purchases with his credit card?
  • How about the way he approached paying off his credit card?

What were some of the mistakes that Dominic’s friend Howard pointed out?
What are some other mistakes we make with credit?

What were some of the consequences of Dominic’s mistakes?

How can Dominic avoid making the same mistakes in the future?

Students should be able to identify the following mistakes and their consequences:

Bad Credit Habits and Numbers of Corresponding Consequences (this list is for the teacher to check which consequences correspond to which habits):

  • No Credit Established – Consequences 1, 4, 6, 8
  • Late Card Payments – Consequences 1, 2, 3, 4, 7, 9, 10
  • High Balances – Consequences 1, 7, 9
  • Over Credit Limit – Consequences 1, 2, 3, 4, 7, 9
  • Failing to Read Fine Print – Consequences 1, 7, 9
  • Closed Overdue Accounts – Consequences 1, 3, 4, 5, 6
  • Too Many Accounts – Consequences 1, 2, 3, 4, 7
  • Erroneous Credit Report – Consequences 1, 3, 4, 6, 8


  • bad credit history
  • go into debt
  • high future interest rates
  • declined a mortgage loan
  • declined a small loan
  • declined a credit card with a high limit
  • interest payments
  • no money in emergency
  • fee payments
  • credit card cancelled by company

5. Now discuss with the class some ways to avoid pitfalls. Ask the class how they should guard against the dangers of using credit. Write the answers on the board.
(Their answers should correspond with the list below.)

  • establish credit
  • make payments on time
  • pay the entire payment amount – not just the minimum payment
  • read the fine print when you sign up for and receive your credit card so that you’re not surprised by any of the fees associated with it.
  • Don’t purchase something you know you can’t pay for
  • Know your credit limit so that you don’t purchase over it
  • Try not to have too many accounts – having many accounts does not
  • establish better credit
  • Do not close overdue accounts – it is better to keep the accounts open and begin paying bills on time

6. Ask the class the following definitions and then write them on the board:

Credit: the providing of money or goods with the expectation of payment in the future.

Credit limit: The maximum amount of credit given to a cardholder. The cardholder will pay a fee if their purchase exceeds the credit limit.

Optional Closing Activity

Using the computer connected to the Internet, go to this YouTube video and show it to the students.

This one minute video clip is a funny fake commercial about comparing credit cards. Show it for a laugh and then tell the students that next week they will be learning how to assess different credit card offers.