How much do you really pay when you use a credit card?

A young person turns eighteen and heads off to college or perhaps starts working. He is blasted with offers of easy credit. Low introductory rates, free t-shirts and water bottles, and access to quick cash entice him to sign up. Then, he goes shopping. Without a basic understanding of how credit works, he can get thousands into debt before he even knows what hit him!

Of course, credit is a complicated topic. This lesson focuses on the basics of borrowing with a credit card including interest rates, monthly compounding intervals, and different payback options. By comparing a few different scenarios, students will understand how much an item can *really* end up costing when it's purchased with a credit card.

- Compare the consequences of not paying balances on two cards with different APRs
- Observe the effect of adding monthly compounding to the model
- Compare the effect of paying the minimum versus paying more in how much interest is paid
- Compare the effect of paying the minimum versus paying more in how long it takes to pay off the balance

- Graphing calculators or spreadsheet