What's Up?

Mom, Dad, or an older child should read aloud the following transactions as Mom uses her credit card.

1. Consumer Mom wants to buy one shoe from Shoes-Are-You.  She needs $1 to pay for the shoe, but her wallet is empty.  All she has is a shiny credit card from ...........(use name of bank issuing credit card which may be on the front or back of the card).  Can Mom use the card to buy the shoe?  (mom waves the credit card.)
    
2. Consumer Mom shows the credit card to Sammy, owner of the Shoes-Are-You store.  "Yes," Sammy says to Consumer Mom, "you can use that credit card to buy this shoe."
    
3. Sammy takes the credit card from Mom and swipes it through the credit-card machine (use calculator or toy machine). Sammy returns the credit card to Mom and giver her the shoe with the Credit Card Receipt (Card #4) sticking out of the shoe.
4. Consumer Mom reads the Credit Card Receipt aloud:  "Consumer Mom bought one shoe for $1."  Mom puts the credit card and the receipt into her wallet.  She will need the receipt if she must return the shoe and to compare with her bill that will come from the bank.
    
5. Sammy now turns over and reads aloud the Credit Card Record (Card #3): "Consumer Mom bought one shoe for $1."  Sammy presents this card to Banker Bonnie (Craig) at the .......(bank that issued the credit card).
    
6. Banker Bonnie (Craig) takes the Credit Card Record (Card #3) from Sammy and gives him/her a one-dollar bill from the bills labeled "Bank´s Money" in exchange.
    
7. Sammy is happy.  He/she has sold a shoe for $1.  (Sammy waves dollar bill.)  Consumer Mom is happy.  She has a new shoe.  (Mom waves shoe.)  Banker Bonnie is happy.  She has "loaned" $1 of the bank's money to Consumer Mom to buy a shoe.  (Banker Bonnie/Craig waves Credit Card Record.)
    
8. Has Consumer Mom paid for the shoe yet?  (No.  When she used her credit card to buy the shoe, she was promising to pay in the future.  Sammy gave Mom's "promise-to-pay" to the bank, and the bank paid for the shoe.  Now, Mom owes $1 to the bank.
    
9. Banker Bonnie turns over the Credit Card Bill (Card #5) and reads it aloud.  The banker then puts the bill (Card #5) into the envelope addressed to Mom and "delivers" it to her.
   
    
10. Consumer Mom opens the bill and reads aloud her choices:  "Pay $1.00 for the shoe you bought.  Pay now: $1.00 or Pay later: $1.25."  What should Mom do?
     
11. Consumer Mom now turns over Card #6, A Check from Mom to the Bank, and reads it aloud.  Mom has decided to pay $1 now instead of paying $1.25 later.  She puts the check (Card #6) into an envelope addressed to the bank and "delivers" it to the bank.
     
12. Banker Bonnie opens the envelope from Consumer Mom.  The Banker reads aloud again from Card #6:  "A check tells the bank to take money out of your account to pay for something you bought."  Banker Bonnie moves 4 quarters from the card labeled "Consumer Mom's Money" over to the card labeled "Bank's Money."
     

• Suppose Mom didn't have $1 in the bank when the credit card bill came?  (She would have to pay $1.25 to the bank later when she had the money.)
• What if Mom made a mistake and sent the check for $1 to the bank when there wasn't enough money in her bank account?  [The bank would send the check back to Mom marked "Insufficient (not enough) Funds."  She would have to write another check for $1.25 later when she had money in her bank account.  And, the bank will charge her a fee (more money) for "bouncing" a check.]