Choosing a Credit Card

Setting the Stage

Financial management and career planning are inextricably linked. You can’t do one without considering the other. Acquiring a credit card is one of the first types of credit a person will access upon landing a first job. Without a good understanding of the way this type of credit works, most people will fail in the management of their first consumer credit experience, establish bad financial management habits, and stumble through their lives learning by trial and error.

Material & Preparation

• Arrange for computer and internet access for students working in pairs or groups.
• Download the Credit and Credit Cards Anticipation Guide Reproducible (1 per student) [Google doc] [Word doc] [PDF]
• Download the Shopping for Credit Cards Reproducible (1 per student) [Google doc] [Word doc] [PDF]

What to Do

Teachers could begin this topic by conducting a class discussion surrounding credit cards. Sample questions could include:

• How does a credit card work? 
• Are credit cards free? 
• What is Annual Percentage Rate (APR)? 
• What is a grace period? 
• What are transaction fees? 

Teachers could have students complete the Credit and Credit Cards anticipation guide Reproducible to help activate prior knowledge and to stimulate their thinking on this topics. For more information on how to make the best use of Anticipation guides refer to the Let’s Talk Science website. The answer key is in the Details section below.

After they complete the Anticipation Guide students could be arranged in pairs or groups of 3-4 to share their thinking and do some initial discussion and sharing of what they know about credit cards prior to having the class engage in a broader discussion. 

Teachers could have students use the Shopping for Credit Cards Reproducible to research the costs and features of three major Credit Cards. 

When students have completed this activity, they should be able to answer the following questions. Teachers could assign the following questions or use them in a class discussion to help ensure students have developed the skills that will enable them to understand credit and select an appropriate credit card for their needs.

• Which credit card has the highest annual percentage rate and how much is it?
• What method is used to calculate the monthly finance charges for each credit card?
• When does the finance charge begin to accrue on the credit card from the local department store?
• Do any of the cards have annual fees? If so, which one(s) and how much?
• Is there a transaction fee on any card? If so, how much is it?
• Is there a minimum finance charge on either of the major credit cards? If so, how much is it?
• Does the first major credit card charge a fee for late payments? If so, how much is it?
• What is the grace period on the credit card from the local department store?
• Brenda wants to buy a new HDTV that costs $1,200. According to her budget, she can afford payments up to $120 per month. Of the three credit cards you have found, which would you recommend Brenda use to purchase the HDTV? Why?