Q T Pi Fashions  Learning About Credit Card Use
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.
KEY CONCEPTS
Choice, Consumer Economics, Consumers, Credit, Decision Making, Incentive, Interest Rate, Money Management
STUDENTS WILL
 Define the relationship between credit and incentives, for buyers when purchasing goods and/or services.
 Define the relationship between interest and incentive, for borrowers when purchasing goods and/or services.
 Analyze the pros and cons of credit card use.
 Describe how finance charges effect the purchases of items.
INTRODUCTION
Credit cards are convenient, user friendly, and at times dangerous. In this lesson students will learn the joys and dangers of using credit as they help Credita, the main character in this activity, solve her credit problems. Today's teens are frequently offered credit cards through the mail, and the temptation to "buy nowpay later" for instant gratification, may be quite compelling. This lesson illustrates how quickly credit card purchases can create a dangerous situation for buyers.
Special note: I used a female character in this example, but the lesson could just as easily be changed to feature a male character. He could run into difficulty using his credit card to purchase automobile accessories, sporting equipment, or concert tickets.
RESOURCES

Student Credit Cards: Students will use the bankrate.com web site to complete the activities in the "Possible Interactions" section below.
www.bankrate.com/brm/rate/cc_ratehome.asp?cc_online=0&hAboutType=C&product=cc&prodtype=cc&web=brm&R1=1&card_type=Student&card_class=All&cc_freq=1

Hows Your Credit?: Students can use this website to find their FICO score in the extension activity.
www.bankrate.com/calculators/creditscoreficocalculator.aspx

Loan Calculator: Students can calculate the real cost of their debt. Used in the extension activity.
www.bankrate.com/calculators/mortgages/annualpercentageratecalculator.aspx

Credit Card Calculator: Students can use this calculator to see how long it will take to pay off a given amount of debt. Used in the extension activity.
www.bankrate.com/calculators/creditcards/creditcardpayoffcalculator.aspx

The True Cost of Paying The Minimum: Students can see how long it would take and how much they would pay in interest if they just pay the minimum payment. Used in the extension activity.
www.bankrate.com/calculators/managingdebt/minimumpaymentcalculator.aspx

Q T Pi Fashions worksheet: Students will use the Q T Pi Fashions worksheet as a learning tool throughout this lesson.
Student Worksheet
Teacher Worksheet

Financial Fitness for Life Curriculum: For additional lessons on personal finance, students may use the National Council on Economic Education's new curriculum, "Financial Fitness for Life: Bringing Home the Gold  912" and "Financial Fitness for Life: Shaping Up Your Financial Future  68." Visit the National Council on Economic Education's web site at www.ncee.net and click on the special "Financial Fitness for Life" link. Information is available at this site for the purchase of "Financial Fitness" materials.
fffl.councilforeconed.org
PROCESS

Tell the students they are going to learn about the joys and dangers involved in the use and misuse of credit cards. They are going to meet Credita who has just received a new card from her favorite clothing store.

Ask the students to define credit, finance charges, interest, credit limit, incentive and annual percentage rate (APR). Make sure the students have a good understanding of these terms.

Ask students: What incentive is there for credit card providers to provide credit (lend money) to credit card users? [Credit card providers receive interest from credit card users sometimes at high percentage rates. Credit card companies can also charge an annual fee for the use of their card, and they can also charge the businesses a percentage of the cost of the goods and services that they have provided.]

Distribute the handout, Q T Pi Fashions worksheet. Read or have the students read the introduction to the lesson.

Have the students work individually or in pairs to complete the first balance sheet and the answers to questions 14.

Use the Teachers Copy answer sheet in reviewing this section of the lesson

Then, assign the students, individually or in pairs, to complete the second balance sheet and questions 58.
 Use the Teachers Copy answer sheet in reviewing this section of the lesson.
Note:
A special Teachers Copy of the Q T Pi Fashions worksheet has been created and may be printed out for reference use and for answers to the Q T Pi Fashions handout.
For Computation purposes:
 All figures are rounded to the nearest 100.
 The 1.75% interest and finance rate has been rounded to a .018
ASSESSMENT ACTIVITY
Either the "Conclusion" activity or any of the bankrate.com activities (or both) could be used as possible evaluation activities.
Teachers could also create a scenario of a credit card situation and have the students complete the activity as they did in the Q T Pi Lesson.
CONCLUSION
Ask the students to write a letter to Credita given the following: If Credita asked you for advice about the smart use of credit, what would you tell her so that she could avoid the problems she encountered during her last credit card experience? Try to use as many of the new credit terms you learned in your letter.
EXTENSION ACTIVITY
Using the bankrate.com. web site within the Credit Cards page, students should find the best card for themselves. To do this they should go to the Student Card page and start looking for the best cards. Have the students select three cards they would consider. Have the students name and give the particulars of the cards, and explain why they would apply for these cards.
Return to Credit Card page to complete the online activities:
For additional lessons on personal finance, students may use the National Council on Economic Education's new curriculum, Financial Fitness for Life .
EDUCATOR REVIEWS

“Thank you for a wellthought out lesson. I will use it for a money management class designed for 7th and 8th graders.”

“Good lesson! I found it to be challenging and very informative for my students.”

“This looks really cool.”

“Excellent lesson! I even used it for myself.”

“It happens that I have a lot of free time, which I devote to my hobbies. I could be reading clauses or looking through photos for hours, but now I spend all my time on your site!”

“This looks awesome! I am going to try to tailor it to a 13 grade class.”

“The lesson is great! I am not sure if it's me or if some of the numbers are off. In the Q T Pi Fashions lesson in June on the first table you have to figure out her payment because she has to pay 10% of her Balance and it is over her normal $100 payment. Looking at the answer key it looks like your 10% ($1108.95 x 10% = $110.90 not $110.93) is off by .03 and it is making the final answer of $998.02 for July off. Also, question #5, the very first payment looks like you have it as $110.16, which needed to be calculated again because it is over her $100 payment but 10% of $1015.98 is $101.60. So, if the first number is off that throws the entire questions off. If I am wrong about this please let me know if not could we possibly fix it? EconEdLink: We have fixed the numbers on both the student and teacher version. Thanks”

Review from EconEdReviews.org
Great Idea, but numbers incorrect.
“The lesson itself was great! It helped my students learn the real cost of using credit, but some of the numbers are incorrect. I used the lesson, but made my own worksheet.”