Credit cards are convenient, user friendly, and at times dangerous. In this lesson students learn the joys and dangers of using credit as they help Credit, the main character in this activity, solve her credit problems.
Students participate in a series of activities that provide them with a simulated credit score and an auto loan interest rate based on their credit score. Then they learn to use compound interest and amortization schedules to calculate the real cost of buying a car, and they compare the total cost of buying a car for individuals with high and low credit scores. At the conclusion, students have a second opportunity to obtain a higher credit score and evaluate how this will affect what kind of car they can buy. Students should have some mathematical background in exponents and the idea of percents before beginning this lesson.
During the week of September 20, 1998, the US Senate agreed to debate a bill (S 1301), intended to make it more difficult for people of means to use bankruptcy to walk away from debt. Those who could pay at least 20 percent of their unsecured debt would be steered by judges to file for Chapter 13 bankruptcy, which entails some repayment. They no longer would qualify for Chapter 7, which requires little or no repayment. The bill also would provide more collection tools to lenders such as credit card companies, stores and banks. An estimated 1.35 million Americans filed for bankruptcy last year, up 25 percent from 1996 and double the 1986 level, according to participants in the debate. Discussion topics include credit card debt, bankruptcy, loans, interest rates and financial literacy.
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