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Lesson 3: Using Credit Cards Wisely

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Hyɛ no nsow a efi ɔkyerɛwfo no hɔ:
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Learning Objectives

Students will be able to:

  • Explain how a credit card works in terms of making purchases and managing payments

  • Understand how interest is charged and how to avoid or minimize it

  • Discuss different perceptions of debt and reasons why people’s experiences with debt may vary

National Standards for Personal Financial Education

 Managing Credit

  • 1b: Compare the cost of borrowing $1,000 using consumer credit options that differ in rates and fees

  • 10a: Describe how failing to repay a loan can negatively impact a person’s finances and life

 

Learning Objectives

Students will be able to:

  • Explain how a credit card works in terms of making purchases and managing payments

  • Understand how interest is charged and how to avoid or minimize it

  • Discuss different perceptions of debt and reasons why people’s experiences with debt may vary

National Standards for Personal Financial Education

 Managing Credit

  • 1b: Compare the cost of borrowing $1,000 using consumer credit options that differ in rates and fees

  • 10a: Describe how failing to repay a loan can negatively impact a person’s finances and life

 

Analyze the image on the worksheet to answer the questions on this Data Crunch.

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1.

Between 2000 and 2024, which year had the lowest average credit card interest rate and approximately what was it?time and pay

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28.

If your credit card limit is $800 and your outstanding balance is $725, what is the largest amount you can charge on that card in the upcoming month?

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29.

Each of the following people has $5,000 in debt. Which debt is most worthwhile?

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5.

Hypothesize what this chart will look like for the next 10 year period. Explain why.

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6.

Which best describes how a credit card works?

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7.

What is the advantage of paying your credit card balance in full each month?

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8.

What is an outstanding balance?

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9.

Why is it more difficult to get out of debt when only paying the minimum payment?

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10.

The video advises you to "be a deadbeat.” What does that mean?

You buy a new phone using your credit card. Including accessories, it costs $900.

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12a.

How much would the minimum payment be?

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12b.

Make a prediction: how long would it take you to pay off the phone if you only make the minimum payment every month?

Your Credit Card

  • Interest rate (APR): 19.9%

  • Minimum payment: 3% of your starting balance OR $25, whichever is higher

You buy a new phone using your credit card. Including accessories, it costs $900.

Use Bankrate’s Credit Card Payoff Calculator to complete the chart comparing 3 payment options for the phone.

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22.

The person at the very end of the video says he has $130,000 in student loan debt and describes it as “worth it.”

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26a.

Would you agree with him? Why or why not?

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26b.

What are some other reasons an individual could have that much debt and still consider it worthwhile? Explain your thinking.

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26c.

On the other hand, some people at the beginning of the video had absolutely no debt whatsoever. What are some possible ways they achieve a debt-free lifestyle while others do not or cannot?

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26d.

Other than credit card usage, what are some other reasons people say they are in debt? Do their reasons for carrying debt seem valid to you? Why or why not?

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26e.

Throughout the video, you can tell that individuals’ FEELINGS about their debt are quite different. What might cause one person to worry about the same level of debt that someone else feels quite comfortable having?