Shop till You Drop & Learn About Financial Literacy An
Engaging Lesson for Middle-School Aged Students Ellen F. Reece
Blended Learning Coach North Iredell High School Olin, NC
Slide 2
Learning Targets I will understand what a credit card is &
how people use it I will understand what a credit score is and how
it affects risk-based interest rates I can use a spreadsheet to
calculate loan repayment & the cost of credit I can correctly
solve real world problems that involve simple interest and
percentages.
Slide 3
How does this fit in Common Core? 7.RP.3 Use proportional
relationships to solve percent problems. Examples: simple interest,
tax
Slide 4
To Learn this.. We shop! Image from MicroSoft Clip Art
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Initially we will be in two groups to do this activity: Group
1. Roll the dice - credit rating Investigate credit cards and
interest rates Roll the dice determine monthly payments Task:
Record personal information and fill out the worksheet. Group
2.Shopping!!! (Everyones Favorite Part) Task: Students record
purchases on a sales slip and use coupons. This part lasts as long
as it takes Group 1 to get through their part then we switch and
each group does the other task.
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Groups switch tasks: Then as a whole class: Determine how long
it will take to pay for purchases & how much interest it will
cost! (I use an initial worksheet and then an Excel Spreadsheet)
Then reflect on what youve learned.
Slide 7
Group 1: Roll the Die & Give Out the Credit Cards Roll a 1
or 2 - credit rating is 400 (very bad) Roll a 3 or 4 credit rating
is 600 (medium) Roll a 5 or 6 credit rating is 800 (excellent)
Slide 8
Group 1: Investigate what those numbers mean.. Watch these two
videos and fill in the answers.
http://www.youtube.com/watch?v=qWWZ77- 1YuA
www.youtube.com/watch?v=dlne-tAEV4c
Slide 9
Group 1: Now Compare the Scores: Students fill in the table
while watching the video. Credit Score: 400 List likely behaviors
that lead to that score Credit Score: 600 List likely behaviors
that lead to that score Credit Score: 800 List likely behaviors
that lead to that score
Slide 10
Group 1: Now Compare the Scores: Example of one filled in after
watching the video. Credit Score: 400 List likely behaviors that
lead to that score Credit Score: 600 List likely behaviors that
lead to that score Credit Score: 800 List likely behaviors that
lead to that score Too much debt for your income Moderate amount of
debtLittle to no debt Always late making paymentsSometimes late
with payments Never late with payments Some debts not paid at all;
too little income Not much income left each month after bills paid
Plenty of income left after bills are paid Credit card balances
increasing each month; too many credit cards too quickly Several
credit cards with remaining balances each month Credit cards paid
off each month No savings living month to month Some
savingsSubstantial savings and investments
Slide 11
Group 1: Investigate Credit Card Interest Rates Students are
given the task of reading informational texts credit card
disclosure statements Then they are asked to assign a credit card
interest rate to each credit rating These are actual disclosure
statements that came in my mail.
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Group1: Investigating Credit Card Interest Rates Continued
Credit Score: 400 Credit Score: 600 Credit Score: 800 Students are
required to read the disclosure statement and then assign a logical
prediction of the interest rate that will be charged based on the
credit score. I do not allow them to use the 0% intro rate.
Slide 13
Investigating Credit Card Interest Rates: students record their
rate on their credit card. Credit Score: 400 Credit Score: 600
Credit Score: 800 Interest Rate is 29.99% Interest rate is 14.99%
Interest rate is 9.99% Students are required to read the disclosure
statement and then assign a logical prediction of the interest rate
that will be charged based on the credit score. I do not allow them
to use the 0% intro rate.
Slide 14
Roll a die to determine the amount repaid monthly; record on
credit card Roll a 1 repay $10 per month Roll a 2 repay $20 per
month Roll a 3 repay $30 per month Roll a 4 repay $40 per month
Roll a 5 repay $50 per month Roll a 6 repay $60 per month
Slide 15
Group 1: All information is then recorded on the students
credit card Iwil Taku Money International Bank Credit Card
Name________________________________________ Credit Score
Number_________ Credit Rating_________ Annual Interest
Rate_________ Monthly repayment Amount_________
Slide 16
While the first group is determining their credit card data,
the other group shops! In small groups, pick your merchandise from
the selection of catalogs provided. Record your purchases on the
sales slip. Dont forget to add in a sales tax of 7%. I try to have
a wide variety of catalogs on hand for them to look through. I give
them at least a half hour to do this. Also I walk around with
discount coupons they can apply to purchases.
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Sales Slip Name_________________________ Item
#CatalogDescriptionPriceSales Price Number Purchased Total Amt With
Tax Total Amount Owed to Credit Card Company = ____________
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Sales Slip Example: Name___Joe Smith__________________ Item #
page # CatalogDescriptionPrice % Discount Sales Price Number
Purchased Total Amt With 7% Tax KP-78069 47 Hammacker Schlemmer
144x Binoculars$199.9525% $149.96 1$160.46 KP-82960 77 Hammacker
Schlemmer Remote controlled dueling helicopters $99.950%4
sets$427.79 839555 70 Melton International Tackle PENN Fathom Star
Drag Reel $449.9915% $377.83 1$404.28 Total Amount Owed to Credit
Card Company = $992.53
Slide 19
Coupons! If students are grouped by ability: Group A: pass out
10%, 20%, & 30% off coupons Have them look for structure &
patterns. Group B: pass out 0.005%, 0.05%, 0.5%, 5%, and 50% off
coupons Have them look for structure & patterns Group C: pass
out 50% off, -50% off, 500% off, and -500% off coupons Ask them to
make sense of these coupons, which would they rather have; ask them
to justify their answer
Slide 20
Repayment!!!! Group 1: Use the Excel spreadsheet, your interest
rate, and monthly payment to determine how long it will be before
you have paid the debt. Also determine how much your interest cost
will be. This part can easily be differentiated.
Slide 21
Repayment!!!! Group 2: Same tasks as Group 1 plus compare each
individuals situation in your group and answer these questions: 1.
What characteristics do people have in common that are able to pay
off their debt quickly with minimal interest expense? 2. What
characteristics do people have in common that are not able to pay
off their debt quickly and have a large interest expense. 3. Is
anyone never going to be able to pay their debt off? Why? What will
happen to that person? This part can easily be differentiated.
Slide 22
Repayment!!!! Group 3: Create an Excel spreadsheet that will
calculate your the debt repayment scenario using your interest rate
and monthly payment; determine how long it will be before you have
paid the debt. Also determine how much your interest cost will be.
This part can easily be differentiated.
Slide 23
Math Involved: Simple Interest Formula I = prt where p =
principal (amt. borrowed) r = the monthly interest rate t = the
time (1 month for this example) Remember: Annual interest rate is
for the whole year; if we are determining monthly payments, we must
divide the interest rate by 12.
Slide 24
Example of 1 st Months Payment: Joe Smith borrowed $992.53
Interest rate = 14.99% Monthly repayment amt = $20 First monthly
payment = $20.00 He owes $972.53 Interest = ($972.53)(0.1599/12)(1)
= $12.18 New amt owed = $972.53 + $12.18 = $984.71
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Questions? How much did he pay? $20.00 How much did his bill go
down? About $8.00 Does it look like he will be able to pay off his
debt quickly? These facts are always eye openers for the
students!
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Now on to the spreadsheet As a whole group: I ask volunteers to
use their individual cases to figure out what kind of shape they
are in financially. There are always students who go bankrupt! And
there are always students who are very conservative with their
purchases and the amount they pay in interest. It is good for the
whole class to see the differences.
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Reflections: Answer these questions in full sentences using
correct punctuation, spelling, and grammar.
Slide 28
Adam, The interest is increased as the credit rating goes down,
which means that you must pay more when you receive a bill.
Danielle, You have to pay a lot more; you could go bankrupt.
Courtney, You could end up owing a lot of money. What are the
consequences of having a bad credit rating?
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Is it better to pay the maximum or minimum each month?
Brooklyn, Maximum because if you pay the minimum, you will never
get it done. Justin, The most because you will pay it off faster.
Sarah, Maximum, so you can finish paying it off faster, and it wont
affect your credit.
Slide 30
What is good about a credit card? Jacob, You wont have to carry
around all your money in your pocket and if it is stolen, you can
track the last time it was used. Courtney, You could run out of gas
and have no cash. Lane, You can use it to order things on line. JT,
It is convenient.
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What is the connection between responsible credit card use and
being able to borrow for large purchases? Maggie, It is good to
have a credit card so you can buy a house and car. Elizabeth, Most
people need to borrow money sometimes. You couldnt have a house or
a car because you cant pay them out of pocket.
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What is bad about a credit card? Justin, You are more likely to
spend more than what you need to. Brooklyn, You will always have to
pay the money back to the bank. Kendall, You could go overboard and
not pay it back. Danielle, You have to pay it all off with
interest; it can be a lot of money. Briann, If you have bad credit,
it might make you go bankrupt because the interest might be more
than you can pay.
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What is the most important thing you learned about credit
cards? Avery, Never spend more than you can pay off. Ethan, You
need to have a good credit score and enough money to pay off bills.
Emily, Be careful on how much you spend, it will take a long time
to pay it off. Adam, That sooner or later you will have to pay what
you owe and to act modestly and wisely.
Slide 34
How Does This Fit Common Core and Your Teacher Evaluation?
7.RP.3 Use proportional relationships to solve percent problems.
Examples: simple interest, tax The students have read informational
text in the form of credit card disclosure statements. Theyve used
or created technology in the form of a spreadsheet. Youve increased
their 21 st Century skills by educating them about a real-world,
common financial instrument. Their written reflections show how
important this real-life lesson is!
Slide 35
Resources on my school website: The student worksheet, the
credit card template, the spreadsheet, this ppt, and the links to
the videos I found. I did not list the disclosure statements to
avoid copyright infringement. These items are meant to be
approximations of the real world.