Beacon Lesson Plan Library

I'll Just Charge It

Beth Santini
Lee County School District

Description

Students explore the advantages and disadvantages of credit card use before they fall into the credit trap!

Objectives

The student understands the advantages and disadvantages of various kinds of credit (e.g., credit cards, bank loans, or financing with no payment for 6 months).

Materials

-At least 10 electronic catalogs
-Scissors
-Glue or glue sticks
-Two mock credit card statements for each student
-Two sets of different colored note cards
-Transparency
-A CD or tape of lively music
-Calculators
-Writing instruments as desired
-A copy of the Rubric for each student
-A T Chart for each student

Preparations

Preparations
1. Review information on credit provided on the teacher camp section of www.consumerjungle.org.

2. Collect electronic catalogs.

3. Prepare first month credit card mock statements for each student. Add a timely statement, date of purchase and Payment due date (30 days from statement date) (see associated files)

4. Prepare second month mock statements for each student. Again add timely dates as in step 3.. (see associated files)

5. Prepare two sets of different colored note cards with the terms and definitions the students will need to complete the activity. (see associated files for terms and definitions)

6. Prepare two sets of different colored note cards with the terms and definitions the students will need to complete the activity. (see associated files for terms and definitions)

7. Prepare transparencies if you choose to use an overhead projection.

8. Prepare a T chart for each student.

9. Print out a copy of the rubric for each student.

Procedures

Day One
1. Tell the students they are going to go shopping for their favorite piece of electronic equipment and that they will be paying for the item with their first credit card.

2. Tell the students they will be expected to identify and explain at least three advantages and three disadvantages of credit cards upon completion of the activities. Provide students with a copy of the T Chart Rubric. (see associated files)

3. Distribute an electronics catalog to each student and have them choose and cut out a picture with the description and cost of their chosen item (item cannot cost more than $500.00).

4. Distribute mock first month credit card statements (see associated files). Fill in timely dates prior to distribution.

o statement date
o purchase date
o payment due date (30 days from statement date).

5. Review vocabulary on the statement. (see associated files for Terms and Definitions)


6. Have the students put their names on the statement and add

 description of the item purchased
 cost of item
 name of store (catalog name)
 item # (next to the item in the catalog)

7. Review the following entries on the form

 monthly membership fee ($ 6.00 is a common fee on cards for consumers without a credit history or with poor credit)
 APR (18.00% is a common annual rate for consumers without a credit history or with poor credit)
 balance due (membership fee plus cost of item)
 minimum payment (have students calculate 3% of the balance due for the minimum payment)
 finance charge ($ 00 on first statement)
 late and over limit fees ($ 00 on first statement)
 amount of payment (enter the minimum payment)

8. Define each term again as they fill in the blanks. (see associated files for terms and definitions)

9. Put the terms on one set of note cards and the definitions on another (use a different color set of cards for the definitions.)

10. Distribute the cards to the students, have them get up and quickly switch cards with several students while playing some lively music.

11. When the music stops, students pair up with the student who has the matching term or definition. Play several rounds if needed.

12. Distribute a second set of mock statements which will include (teacher can calculate for the students or have them do the calculations) the information that would appear on their second statement

o Balance forward (old balance minus first payment)

o finance charge (APR of 18%X balance forward x 30 /365)

o new balance due (balance forward plus $ 6.00 membership fee and finance charge)

o new minimum payment(new balance due times 3%).

13. Have the students estimate how long it will take them to pay off the credit card debt if they continue to make minimum payments.

14. Using the APR of 18.00% and the membership fee of $ 72.00 per year, have the students estimate how much they will actually wind up paying for the item. Inform the students that credit card companies often charge a $25.00 late fee if the payments are received after the due date and another $25.00 if the balance exceeds their credit limit. Have students add two late payments and one over limit charge to the cost.

15. Write the following statements on the board or on a transparency:

a. A credit card allows the buyer to charge items when they do not have enough cash to pay for them outright.

b. Credit cards allow the buyer to pay a very small percentage of the purchase price.

c. The actual cost of an item can increase substantially when you use a credit card.

16. Ask the students to identify if these statements are advantages or disadvantages. List responses on board or overhead. Students are likely to identify the first two as advantages and the last as a disadvantage.

17. Explain to the students all three are disadvantages.

a. The first is the most serious disadvantage because it allows consumers to buy merchandise that they really cannot afford.

b. The second is a disadvantage because it can take months and years to pay the debt.

c. The third is a disadvantage because of the added membership fees, finance charges late and over limit fees.

17. Homework: Ask students to discuss the advantages and disadvantages of credit card use with their family members.

Day 2
1. Review the disadvantages of credit card use. Ask the students if they can name any other disadvantages from their conversations with their family members. Add these to the list on the board or overhead.

2. Tell the students that now they are going to identify the advantages of credit card use.

3. Using the board or overhead, have the students list the advantages that they know or have learned from their family members. These may include

 Credit cards are more easily accepted than checks at some businesses
 Credit cards provide customers with specific consumer protection.
 Credit cards are convenient to use for on line and phone purchases
 Credit cards are often required as identification.
 Credit cards used responsibly can establish a credit history that will allow you to get lower rates on other types of loans.

4. Have students go to the Internet to www.consumerjungle.org (This site is a bit noisey, you will need to turn down the volume on your computers.)

5. Students will enter the student camp and go to the credit cave. They will click on credit cave activities and “Tour the Temple”. If there is time they can complete all the activities on the site. All the activities provide feedback to the students.

6. Distribute the T Charts and have the students paste the picture of the item they cut from the catalogs. Ask students to fill in the T Charts identifying and explaining at least three advantages and disadvantages of credit use.

7. Distribute completed Rubric as feedback.

Assessments

Note: This lesson will align solely with the advantages and disadvantages of credit cards.

Students demonstrate their understanding of the advantages and disadvantages of credit cards by completing a T chart with explanations of at least three advantages and three disadvantages of credit cards.

Criteria:
Needs work: Student identifies less than three advantages and/or disadvantages of credit card use. Student does not clearly explain the advantages and disadvantages.

Good: Student has correctly identified and explained three advantages and disadvantages of using credit cards.

Exceptional: Students has correctly identified and explained more than three advantages and disadvantages.


Web Links

Consumer Jungle is an interactive, web-based program. It provides consumer education through a variety of activities and topics. The site offers free materials and has areas for students, parents and teachers
Consumer Jungle

Attached Files

Rubric, Terms and Definitions     File Extension: pdf

CreditHeaven     File Extension: pdf

Credit Heaven 2nd Month     File Extension: pdf

Return to the Beacon Lesson Plan Library.