5/12 FA 7.7 Credit Cards

Last updated over 2 years ago

38 questions

Note from the author:

OBJECTIVES & STANDARDS
Math Objectives
Solve multi-step word problems
Use a recursive sequence to model debt repayment
Common Core Math Standards
Link to all CCSS Math
CCSS.HSA.SSE.A.1
CCSS.HSF.BF.A.1.A
Personal Finance Objectives
Explain why a person may need or want a credit card
Explain how a credit card works in terms of making purchases, calculating interest, and managing payments
Read a Schumer box
National Standards for Personal Financial Education
Managing Credit
1a: Describe how credit card grace periods, methods of interest calculation, and fees affect borrowing costs

Instructions

OBJECTIVES & STANDARDS
Math Objectives
Solve multi-step word problems
Use a recursive sequence to model debt repayment
Common Core Math Standards
Link to all CCSS Math
CCSS.HSA.SSE.A.1
CCSS.HSF.BF.A.1.A
Personal Finance Objectives
Explain why a person may need or want a credit card
Explain how a credit card works in terms of making purchases, calculating interest, and managing payments
Read a Schumer box
National Standards for Personal Financial Education
Managing Credit
1a: Describe how credit card grace periods, methods of interest calculation, and fees affect borrowing costs

Intro

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MATH: The Cost of Minimum Payments

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5/12 FA 7.7 Credit Cards

5/12 FA 7.7 Credit Cards

For you, personally, what would be your biggest concern about opening and using a credit card?

When Americans as a whole are surveyed, what do you think they fear most about credit card usage?

On slide 2, how would you categorize the difference between the #1 fear and the entire rest of the list (fears 2-5)?

If one reason to open a credit card is to build credit for bigger, larger loans you might need in the future, does that mean you shouldn’t bother with a credit card if you don’t ever anticipate needing a car loan or mortgage? What do you think?

How is a credit card actually more secure than a debit card?

Part I: Read The Fine Print

Analyze this sample Schumer Box and answer the questions that follow.

Which piece of information would you expect to find on your credit card’s Schumer box?The amount of money you owe next monthThe range of interest rates you will be charged if you carry a balanceThe date your next payment is dueThe terms and agreements on how the credit card perks program works

For you, personally, what would be your biggest concern about opening and using a credit card?

When Americans as a whole are surveyed, what do you think they fear most about credit card usage?

On slide 2, how would you categorize the difference between the #1 fear and the entire rest of the list (fears 2-5)?

If one reason to open a credit card is to build credit for bigger, larger loans you might need in the future, does that mean you shouldn’t bother with a credit card if you don’t ever anticipate needing a car loan or mortgage? What do you think?

How is a credit card actually more secure than a debit card?

Lance has a credit card that gives him 1% cash back on all his purchases, so he’s thinking it's the perfect time to charge a bunch of big ticket items he can’t currently afford. He’ll get tons of rewards! What’s the flaw in Lance’s strategy?

Part I: Read The Fine Print

Analyze this sample Schumer Box and answer the questions that follow.

What is the APR (interest rate) on this card for Purchases made during the first six months that a cardholder has this card?0%15.24%23.24%25.24%

After the introductory period, all consumers who have this Platinum Card will...Pay the same A.P.R.Qualify for an A.P.R. based on their creditworthinessPay the Penalty A.P.R. of 30.24%Be charged an Annual Fee

What is Albert’s daily rate? Round to the nearest ten thousandth.

What is his average daily balance?**TEACHER TIP: Students may mistakenly think Days 1-3 is 2 days, when really it’s 3 (and so forth for each range).

Your calculations calculate interest only for the entire month. Most credit card companies compound interest daily. What effect would that have on Albert’s total balance for this billing period?

What is the #1 reason you should plan to pay your full credit card balance every single month?

If paying the entire balance off every month is the most financially advantageous way to use a credit card, why would anyone charge MORE than they can pay off in a given month?

Explain how your credit limit (also known as your line of credit) and your credit card balance impact one another.

Let’s say you can only afford to pay the minimum monthly payment every month. Will you ever pay your balance back down to $0? Explain.

If you owed the $3500 suggested in the video and you could not afford to pay the full balance in just one month, what would you do to get out of debt?

What is the difference between a traditional credit card and a predatory lender?

Graph the data from question 32 below.

Explain why it’s more costly to only pay the minimum payment amount for a credit card.

What advice might you give these 3 friends?

Which piece of information would you expect to find on your credit card’s Schumer box?The amount of money you owe next monthThe range of interest rates you will be charged if you carry a balanceThe date your next payment is dueThe terms and agreements on how the credit card perks program works

Lance has a credit card that gives him 1% cash back on all his purchases, so he’s thinking it's the perfect time to charge a bunch of big ticket items he can’t currently afford. He’ll get tons of rewards! What’s the flaw in Lance’s strategy?

What is the APR (interest rate) on this card for Purchases made during the first six months that a cardholder has this card?0%15.24%23.24%25.24%

After the introductory period, all consumers who have this Platinum Card will...Pay the same A.P.R.Qualify for an A.P.R. based on their creditworthinessPay the Penalty A.P.R. of 30.24%Be charged an Annual Fee

What is Albert’s daily rate? Round to the nearest ten thousandth.

What is his average daily balance?**TEACHER TIP: Students may mistakenly think Days 1-3 is 2 days, when really it’s 3 (and so forth for each range).

Your calculations calculate interest only for the entire month. Most credit card companies compound interest daily. What effect would that have on Albert’s total balance for this billing period?

What is the #1 reason you should plan to pay your full credit card balance every single month?

If paying the entire balance off every month is the most financially advantageous way to use a credit card, why would anyone charge MORE than they can pay off in a given month?

Explain how your credit limit (also known as your line of credit) and your credit card balance impact one another.

Let’s say you can only afford to pay the minimum monthly payment every month. Will you ever pay your balance back down to $0? Explain.

If you owed the $3500 suggested in the video and you could not afford to pay the full balance in just one month, what would you do to get out of debt?

What is the difference between a traditional credit card and a predatory lender?

Graph the data from question 32 below.

Explain why it’s more costly to only pay the minimum payment amount for a credit card.

What advice might you give these 3 friends?

What is the APR (interest rate) on this card for Purchases made during the first six months that a cardholder has this card?
0%
15.24%
23.24%
25.24%

After the introductory period, all consumers who have this Platinum Card will...
Pay the same A.P.R.
Qualify for an A.P.R. based on their creditworthiness
Pay the Penalty A.P.R. of 30.24%
Be charged an Annual Fee

What is his average daily balance?
**TEACHER TIP: Students may mistakenly think Days 1-3 is 2 days, when really it’s 3 (and so forth for each range).

What is the APR (interest rate) on this card for Purchases made during the first six months that a cardholder has this card?
0%
15.24%
23.24%
25.24%

After the introductory period, all consumers who have this Platinum Card will...
Pay the same A.P.R.
Qualify for an A.P.R. based on their creditworthiness
Pay the Penalty A.P.R. of 30.24%
Be charged an Annual Fee

What is his average daily balance?
**TEACHER TIP: Students may mistakenly think Days 1-3 is 2 days, when really it’s 3 (and so forth for each range).