F. Financial Literacy · Money and Finances: Paying, Saving and Smart Choices

Ways to Pay: Cash, Cards and More

F1.1 A1About 35 minutes

Learning goals

I can tell the difference between goods and services.
I can name different methods of payment: cash, debit card, credit card, gift card, cheque, online payment and paying with a phone.
I can explain in simple words how each method works.
I can choose a method of payment that works for a real situation.
I can explain why card numbers and PINs must be kept private.

Words to know

goods
Things you can buy and touch, like mittens, apples or a book.

services
Work that someone does for you, like a haircut, a bus ride or swimming lessons.

method of payment
A way to pay for goods and services.

cash
Coins and bills.

bank account
A safe place at a bank or credit union where a person keeps their money.

debit card
A card that takes money straight out of your bank account when you pay.

credit card
A card that lets you pay now with money from a card company. You pay the card company back later.

PIN
A secret number (Personal Identification Number) that you type to prove a card is yours.

cheque
A paper form that tells a bank to pay a certain amount from your account to someone.

e-transfer
Sending money from one bank account to another using a phone or computer.

Remember from Grade 3

In Grade 3 you paid with cash: coins and bills. When you paid more than the price, you got change back. You counted up like a cashier.

In Grade 4 you will find out that cash is only one way to pay. Grown-ups pay in many other ways, too. Some of them use money that you never even see!

Let's start with a story

It is a snowy Saturday. Noor's family has a busy day.

At the corner store, Grandma buys milk. She hands over a $10 bill and gets coins back.
At the grocery store, Dad taps a card on a little machine. Beep! The groceries are paid for.
At home, Mom pays for Noor's spring soccer registration on the computer.
Noor's cousin uses the gift card he got for his birthday to buy a book.

Everyone paid for something. But nobody paid the same way! Each of these is a method of payment.

Goods and services

We use money to buy two kinds of things.

Goods are things you can touch and take home: a toque, a bag of apples, a hockey stick, a book.
Services are jobs that someone does for you: a haircut, a bus ride, a check-up at the dentist, swimming lessons, fixing a bike.

You can pay for goods and services with all the methods in this lesson.

Methods of payment

Here are the most common ways people in Canada pay. Read them with your grown-up and talk about which ones your family uses.

Method	How it works	Example
Cash	You hand over coins and bills. If you pay too much, you get change.	Buying a hot chocolate at the arena snack bar.
Debit card	You tap the card or put it in a machine and type your PIN. The money comes straight out of your bank account, right away.	Paying for groceries.
Credit card	A card company pays the store for you now. Later, you get a bill and pay the card company back. If you do not pay the whole bill on time, you must pay extra money, called interest.	Buying something online.
Gift card	Money is put on the card ahead of time. You can usually use it only at the store that sold it.	A birthday present for a friend.
Cheque	You write the amount, the name of the person or group being paid, the date and your signature. Their bank collects the money from your bank account.	Paying for a summer camp.
Online payment or e-transfer	You use a phone or a computer to send money from your bank account.	Paying a sports registration, or paying back a friend.
Phone or watch	A card is saved inside the phone or watch. You tap the phone to pay. The money still comes from the card.	Paying at a coffee shop.

Common methods of payment in Canada.

Money you can see and money you can't see

When you pay with cash, you can see the money leave your hand.

When you pay with a card, a phone or online, you don't see any money move. But it is still real money. It comes out of a bank account, or it has to be paid back later. A card is not magic money!

With a debit card, money moves from your bank account to the store right away.

With a credit card, the card company pays the store now. Later, you pay the card company back.

Worked example

Example 1: Which way can Maya pay?

The school book fair takes cash only. Maya wants a book that costs $12. In her wallet she has $15 in cash and a $20 gift card for a sports store. How can she pay? How much change will she get?

The book fair takes cash only, so the gift card will not work.
The gift card is for a sports store anyway. It works only there.
Maya has $15 in cash. Is it enough? $15 is more than $12, so yes.
Find the change by counting up: $12 → $13, $14, $15. That is $3.

Maya pays with cash and gets $3 in change.

Worked example

Example 2: Paying from home

Ravi's mom needs to pay $60 for his hockey registration. The hockey club says, "Pay online." Can she pay with cash? Which methods could she use?

Cash is coins and bills. You can't send coins and bills through a computer, so cash won't work.
Online, she could type in the numbers from a credit card.
She could also send an e-transfer from her bank account, if the club accepts it.
Either way, $60 of real money is used. With the credit card, she will pay the card company back later.

She can use a credit card or an online payment such as an e-transfer, but not cash.

Worked example

Example 3: Is the money gone?

Ella and her brother each buy a $6 sandwich. Ella pays with a $10 bill. Her brother taps his debit card. Who spent more?

Ella pays $10 and gets $4 change. $10 − $4 = $6 spent.
Her brother's debit card takes $6 out of his bank account right away.
So each of them has $6 less than before.

They spent the same amount: $6 each. Paying with a card still uses real money.

Keep it safe and private

Never tell anyone your PIN, not even a friend. Cover the keypad with your hand when you type a PIN, and look away when a grown-up types theirs.
Never share card numbers, passwords or bank details, in person, on the phone or online.
Online games and apps sometimes ask you to buy things. Always ask a grown-up first. Those purchases use real money.
If a message or website asks for card numbers, tell a grown-up right away.

Math talk

When you answer a question about paying, explain why a method works or doesn't work. For example: "The gift card won't work because it is only for the toy store."

A funny-but-true fact

Canada's $1 coin is nicknamed the loonie because it has a loon on it. When the $2 coin arrived in 1996, people named it the toonie: it's worth two loonies!

Hands-on activity

Payment detective

You need: paper, a pencil, and some store receipts (ask a grown-up for a few, or collect them on your next shopping trip).

Make a tally chart with these rows: cash, debit card, credit card, gift card, online or e-transfer, phone or watch, cheque.
Look near the bottom of each receipt. Most receipts say how the bill was paid. Look for words like CASH, DEBIT or CREDIT, or the name of a card company. Make a tally mark.
Interview two grown-ups: "What are three things you paid for this month, and how did you pay?" Add tallies.
Which method was used most? Which was used least? Why do you think so?

Math talk: "Were the bigger amounts paid with cash or with cards? Why might that be?"

Grown-up note: cover or cross out any card numbers or personal information on receipts before your child handles them.

Your turn

Name three methods of payment.

Which card takes money straight out of your bank account right away?

When you use a credit card, who pays the store first?

Is a haircut a good or a service?

Zoe has a $25 gift card for a bookstore. She wants a $9 sketchbook at an art store. Can she use the gift card there?

Sam buys a slice of pizza for $8 and pays with a $10 bill. What is his change?

Why should you never tell anyone your PIN?

More practice: warm-up

Coins and bills are called ____.

Is a book a good or a service?

Are swimming lessons a good or a service?

What is the secret number you type with a debit card called?

Name a way to pay where you can get change back in coins.

More practice: on your own

Lucas's uncle lives in another city. He sends Lucas $20 for his birthday without mailing anything. How could he have sent it?

A stand at the farmers' market has a sign: Cash only. Ana has a debit card and $15 in cash. She wants a bottle of maple syrup for $12. How should she pay, and what is her change?

Kai's dad buys $40 of groceries with a credit card. Kai says, "Great, that was free!" Is Kai right? Explain.

Sort these into goods and services: a bus ride, an apple, a dentist check-up, a snow shovel.

Which methods of payment use money from a bank account? Name two.

Challenge

Jordan wants hockey tape for $4 and socks for $9. The store takes cash and cards. Jordan has a $10 bill and a $5 gift card for this store. Can he buy both? Show one way he could pay.

Emma's grandma pays the $15 fee for the Grade 4 skating trip with a cheque. Name three things she must write on the cheque.

Mia has $30 in her bank account. She buys a $7 book with her debit card. Then she buys an $11 puzzle with her debit card. How much is left in her account? Explain why the money really is gone even though she never touched it.

Check your understanding

Quiz

Which of these is a method of payment?

When you pay with a debit card, where does the money come from?

Which of these is a service?

What happens when you pay with a credit card?

What should you always keep secret?

Liam has a $20 gift card for a toy store. He buys a $14 game at that store with it. How much is left on the card?

For parents and teachers

What your child is learning: the Ontario curriculum (F1.1) asks Grade 4 students to identify various methods of payment for goods and services. Your child learns what cash, debit cards, credit cards, gift cards, cheques, online payments (e-transfers) and phone or watch payments are, and when each can be used. Comparing their advantages and disadvantages in detail comes in Grade 6, so keep it simple. The lesson also practises clear explaining and safe decision-making (A1).

Common difficulties:

Thinking cards are "free money." Many children only see adults tap a card. Explain that the money comes from your bank account (debit) or must be paid back (credit).
Mixing up debit and credit. Use the phrase "debit = my money now, credit = borrowed money I pay back later."
Thinking a gift card works anywhere. Show a real gift card and read whose store it is for.

How to help: Narrate your payments for a week: "I'm tapping my debit card, so $23 is leaving our bank account now." Let your child look at a receipt (cover card numbers). Talk about online safety: in-app and in-game purchases use real money, and children should always ask first. Never share your PIN with your child as a game; teach them to look away when someone types a PIN.