Exploring Credit Cards

Lesson Content

• Lesson Plan Template:

  CTE Lesson Plan

• CTE Course Info and Benchmark Notes

  
  

  Program Title (as applicable): N/A

  Course Title: Fundamentals of Finance

  Course Number: 8540400

  Career Cluster: Finance

  CIP Number: 148540400M

  Course Type: Orientation/Exploratory

  Standard(s) or benchmarks

  Focus:

  • SS.8.FL.4.2 Identify a credit card purchase as a loan from the financial institution that issued the card. Explain that credit card interest rates tend to be higher than rates for other loans. In addition, financial institutions may charge significant fees related to a credit card and its use.
  • 02.02 Utilize computer technology to access, analyze, and interpret business information
  • 02.04 Research industry trends on the Internet
  • 13.02 Identify major providers of consumer credit

  Supporting:

  • 13.03 State the reasons consumer credit exists
  • SS.8.FL.4.1 Explain that people who pay for loans are told what the rate on the loan will be. An interest rate is the price of using someone else’s money expressed as an annual percentage of the loan principal.

• Unit Outline

  
  

  This lesson could be taught within a unit focused on using credit. The unit can begin with an overview of loans and interest then students build on and make connections to this lesson by exploring simple interest and compound interest, credit card statements, and how to calculate credit card payments. The unit can conclude with a scenario-based activity where students provide recommendations on how to use, or preserve, credit lines based on given information.

• Career Connection

  
  

  Students will use research skills to find specific information about various credit cards. Once the information is collected, students will use prior knowledge and critical thinking skills to consider common characteristics of credit cards. Knowing where to find financial information and how to decipher it will help students develop their financial literacy and their understanding of the financial sector.

• Learning Objectives

  
  

  Students will be able to:

  • Identify financial institutions that offer credit cards
  • Describe the characteristics of various credit cards offered by financial institutions based on research
  • Explain why there is variability in some of the characteristics of credit cards
  • Discuss why credit card interest rates are similar across financial institutions

• Prior Knowledge

  
  

  Students should be familiar with:

  • Identifying credit cards as a type of loan
  • Using technology to conduct research
  • Knowing financial institutions offer different products and services
  • The concept of an interest rate

• Guiding Questions

  
  
  • How can a consumer make an informed decision when applying for a credit card?
  • What factors should consumers consider when applying for a credit card?
  • Why is there variability in the types of credit cards offered by financial institutions?

• Procedure

  
  

  1. To introduce the lesson, display the Credit Card Advertisement attachment on the board for all students to see or print and pass out a copy of the images to each student. Allow students to review the features of each credit card before facilitating a whole group discussion. The following questions can be used to facilitate discussion:

  • What do you notice and wonder?
  • Which credit card is most appealing to you? Why?
  • Which credit card is least appealing to you? Why?
  • What is APR and how is it related to a credit card?
  • What’s the difference between fixed and variable interest rates?
  • How might the way interest is accrued (simple or compound) affect these rates?
  • Why might consumers prefer a fixed interest rate on a credit card?
  • Why might consumers prefer a variable interest rate on a credit card?

  Conclude the discussion by summarizing students’ main observations, remind them that financial institutions offer credit cards, and reiterate that the features of credit cards vary across financial institutions.

  2. Explain to students that they will conduct research to collect information on 4 different credit cards from various financial institutions. Pass out a copy of the Credit Card Research handout to each student. Each student should also have a computer with internet access.

  • Ensure students understand they should research 4 different credit cards, preferably from 4 different financial institutions, including the card type/name, an overview of the card, fees and interest associated with the card, and decide if they would apply for the card or not.
  • Allow students time to complete their handouts. As students are working, move around the room to visit students and offer support, answer questions, and check for understanding.

  3. Once students have completed their research, facilitate discussions first in small groups and then as a whole group. The following questions may be used to facilitate discussions and assess students’ knowledge and research:

  • What do credit cards have in common?
  • Why is there variability in the features of credit cards across financial institutions?
  • Why do you think compound interest is used to calculate credit card interest? How does this affect consumers? How does this affect financial institutions?
  • How is this information useful?
  • Why is a credit card categorized as a type of loan?
  • How did you decide which credit cards you would apply for?

  4. To bring the lesson to a close, have students revisit the Credit Card Advertisement attachment used to open the lesson, choose 1 of the credit cards, and write a short scenario to illustrate when someone might prefer to apply for that credit card over the other 2 cards.

• Teacher Notes

  
  
  • If technology is not available, or if the teacher wants to have an unplugged lesson, students can use printouts of current credit card advertisements or brochures from financial institutions as their source for their research. These advertisements or brochures would need to be collected and/or printed out prior to the lesson by the teacher.

• Optional

  
  

  Formative Assessment Ideas:

  • The Credit Card Research handouts can be collected and assessed for accuracy.
  • Student scenarios can be collected and assessed for accuracy.

  Accommodation Suggestions:

  • The teacher can assign specific financial institutions and credit cards to students to provide some direction in the research.

  Extension Ideas:

  • If available, a personal banker or another representative from a local financial institution can visit students and discuss common reasons people apply for credit cards, common uses of credit cards, and provide a historical view of credit card rates and features.