Loan Ranger
How much do you really pay when you use a credit card?
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.
Students will
- 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
Before you begin
Students should be able to calculate a percent increase of r% by multiplying by 1 + r. Familiarity with expressing percent growth as an exponential function is helpful, but not assumed. When calculating successive balances after payments are made, students will use either their calculators or spreadsheets to carry out a recursive process. If they aren't familiar with these techniques, you will need to demonstrate.Common Core Standards
Content Standards
Mathematical Practices
Downloads
Additional Materials
- Graphing calculators or spreadsheet
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