Name: __________________________________________________ Period: ____ Date: _________

How Credit Cards Work

Activity Guiding Questions

1. What do you already know about credit cards? Brainstorm and list at least
5 facts.
Discussion
(Think-pair-share)

2. Do you have a generally positive or generally negative view of credit

cards? Why? ​Click here​ to vote in the classroom poll

3. What are your two options at the end of the month when you receive a
EdPuzzle credit card bill?
Watch the video
and answer the
included questions
4. List an advantage and a disadvantage for each option.

5. Try playing the game by feeding each cat fully before moving on to the
next cat. (4 scoops in a row to cat A, 4 scoops in a row to cat B)
a. How many days did you last playing this way?
b. How many cats did you kill?
Catinsanity
c. How many cats went hungry?
Play the game to
demonstrate trying
to stay on top of 6. Try playing the game by feeding one scoop to each cat at a time.
debt and payments (1 scoop to cat A, 1 scoop to cat B, 1 scoop to cat A, 1 scoop to cat B)
a. How many days did you last playing this way?
b. How many cats did you kill?
c. How many cats went hungry?

7. Complete the sentences to show how Cat Insanity is an analogy for debt
repayment.
a. The multiply rate is…
 b. The number of cats is…

c. Your food scoops are…

d. An underfed cat is…

e. A dead cat is...

8. What are other types of APR that can be charged to a credit card besides
APR for Purchases? (list all 3)

Schumer Box
Read the article
and then review 9. Collaborate with classmates to define the important vocabulary terms
the Schumer Box found in a Schumer Box. ​Click here
provided. Each
section is
described in detail
below the box.
10. While ​ALL​ the information in a Schumer Box is important, which items
do you think matter most on a day-to-day basis? (pick 2)

11. If you have an awesome credit score, what would be your likely APR for
purchases?

NerdWallet 12. If you have a poor credit score, what would be your likely APR for
Infographic purchases?
Understand Your
Credit Agreement. 13. Is there an annual fee for this credit card? If so, how much is it?
Open the doc and
skim for important
information. 14. If you are late paying your bill . . . .
a. What is the impact on your annual fee?
b. What is the impact on your APR?
c. Are there any additional fees? If so, how much are they?

15. How many days do you have to pay off your bill in full to avoid interest
on your purchases?
 Scenario: You used your credit card (described on the NerdWallet Infographic)
to buy a brand new laptop for $1,100, and then you put the credit
card away and start to work on paying off the laptop. You don’t use
the credit card for any other purchases.
16. A typical minimum payment for a credit card is 3% of the balance. What
would your likely minimum payment be?

17. Assume you’ve got terrific credit:

a. How long would it take you to pay off this laptop purchase if you only
made the minimum payment?

Credit Card
Calculator b. How much would you pay in interest over the length of your debt?
Use the online
calculator to
18. Assume instead that you have poor credit:
answer questions
about debt. a. How long would it take you to pay off this laptop purchase if you only
made the minimum payment?

b. How much would you pay in interest over the length of your debt?

19. How much money do you save, over the length of the debt, by having a
good credit score?

a. What could you, personally, use that money for? (write your answer in
the ​WordCloud
Scenario: Shortly after you purchase the laptop, you receive your first credit
card bill and forget to pay it.
20. What’s the impact of this mistake on the length of time it takes you to pay
off the debt and the total amount of interest you pay? (assume your
interest rate remains at the penalty APR for the length of your debt.)

21. If you use a credit card and don’t pay the full balance before the first bill
is due, how does your credit score impact the amount of money you
ultimately pay for the laptop?

Critical Thinking
22. Why does the credit card company set the minimum payment so low, at
only 3% of your balance?

23. Why is it important to read the fine print in your credit card’s Schumer
box?

24. True or False: If you stop using your credit card for purchases, you won’t
ever have to pay interest again. Explain.

25. Name two fees you might see on your credit card statement. How can you
avoid those specific fees?