PSHE KS3 / KS4: Credit and Debt – What happens when you borrow money?

Teacher’s Notes

Choose from a selection of activities to help students learn about credit and debt.

before watching

Questions to get the class thinking and talking…

  • What is a debt?
  • What is credit?
  • What should you consider before borrowing money?

Establish that “debt” is money you owe and money you borrow. Before you borrow money, you need to know how much you’ll need to pay back, how you can afford it, and when you’ll need to do it.

Use of the movie

As they watch, ask students to choose the “most important fact” in the clip. After the viewing, bring together the various student responses to form an instant summary of key points.

Watch the clip again, with the sound muted. Challenge your students to provide an alternative commentary, putting in their own words the points raised by the silent Steph McGovern. Turn up the volume every once in a while, so your students can check if they’re correct.

After having watched

Roleplay – Ask students why they might “ask for a credit” (ask for a loan). The class could list the reasons. Emphasize that store cards and mobile phone contracts are credit contracts.

Invite several pupils to role play someone approaching a bank to borrow £1000. (You will assume the role of bank manager!)

Interview each candidate by asking questions such as:

  • Why do you need this loan?
  • Have you considered the alternatives?
  • Are you employed?
  • What is your monthly income?
  • What are your outings?
  • How long do you want the loan to run?
  • What is your credit history like?
  • Can you provide documents to support your claim? (e.g. bank statements, payslips).

Activity ideas

  • Glossaries – Students could compile glossaries of financial terms used in the video clip, as well as their own definitions. This encourages them to clarify their understanding of key vocabulary.

Terms may include: “credit”, “debt”, “interest”, “interest rate“, “annual percentage rate (APR)”, “overdraft”, “mortgage”, “loan”, “student loan” , “payday loan”. ‘ and ‘credit check’.

  • Missing word puzzles – On the board or on the screen, display the following paragraph, without the words in parentheses. Ask students to fill in the gaps.

An overdraft is short term loan, best used for the emergencies. the Bank charges interest AND a daily, weekly or monthly costs. Spend more than you have in the bank without their authorisation and that unauthorized discovered will be Cost you MANY more. If you’re about to leave discoveredcontact your bank and I am okay a cheaper Overdraft.

Ask students to design similar missing word puzzles on other loanforms.

  • APR – Working in pairs, students can use an online loan repayment calculator to explore borrowing £100 at a range of different APRs. For each APR, they should note the length or “term” of the loan, the monthly payment, the total interest, and the total repayable amount.

Point out that, even if the APR and monthly payments seem low, when a loan runs for a long period, it ends up being expensive to borrow little.

Invite each pair of students to draw flyers advertising three loans from their imaginary bank. Each loan has a different APR and a different term. Their classmates must try to spot the best deal (the one that will cost them the least in the end) to borrow £100.

  • Alternatives – Ask the question ‘are there alternatives to borrowing money?’ The class could list suggestions, such as: “Save money, wait to get paid, reduce other expenses, work overtime, sell something to raise money, choose a less expensive item, or ask yourself if you you really need”. buy anything at all.

Supported learning and SEN

Students could (with all support) take a screenshot of Steph McGovern’s film and add their own speech bubble, such as “tell the bank before you go overdrawn”. A collection of “Steph Says” captions and captions could form a financial education comic.

Closing of the lesson

Have students try their missing word puzzles on the class.

It’s a fun and quick way to review course material, reinforce learning, and check student understanding.

Follow-up task

Have the class research the differences between credit and debit cards online. Students could draw a chart comparing the two types of maps.

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