Educational Resources Lets Talk Science Challenge participants

Choosing a credit card

Choosing a credit card (Deejpilot, iStockphoto)

Choosing a Credit Card

Let's Talk Science
Format
Text
Grades
7,  8,  9,  10,  11,  12
Jurisdiction
AB,  BC,  MB,  NB,  NL,  NS,  NT,  NU,  ON,  PE,  QC,  SK,  YT
Guidance & Careers
Career Development
Career Exploration
Financial Management
Financial Literacy

Summary

Students will develop skills to compare and evaluate the terms and conditions of various credit cards.
Students will identify and distinguish between different types of credit cards, develop an understanding of credit cards costs and features, and learn how to shop for 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] [PDF]
  • Download the Shopping for Credit Cards Reproducible (1 per student) [Google 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?

Details

Anticipation Guide Answer Key

BEFORE

STATEMENT

AFTER

T

F

If you are short on money, paying the minimum payment is a good financial strategy to get you by until you have more money.

T

F

It's never good to just pay the minimum payment. The interest payments on the rest you have borrowed will end up costing you much more over time. Try to pay off your credit card balance as fast as you can. 

T

F

Other than interest paid on overdue amounts, the use of credit cards is free to the consumer.

T

F

This depends on the card - some have annual fees or usage fees.

T

F

Using a credit card is the same as borrowing money from the bank.

T

F

In practice this is the same, as in both cases you have to pay the money back. The difference is that you pay interest on the credit card only if you don't pay the whole amount after the grace period.

T

F

When borrowing, it is okay to have monthly payments as long as they are no more than 20% of your monthly net income.

T

F

Generally, loan payments (other than mortgage and car payments) should not exceed 10% of your monthly net income.

T

F

If you pay your credit card balance each month, the interest rate does not matter.

T

F

Absolutely - pay the full balance and you will not pay interest.

T

F

All credit cards are basically the same.

T

F

The rules and fees for cards vary from one issuer to another. Even two cards of the same type and "level"- "Gold VISA" for example - might have very different costs and options depending on which company offers them.  

 

Anticipation Guide Answer Key

BEFORE

STATEMENT

AFTER

T

F

If you are short on money, paying the minimum payment is a good financial strategy to get you by until you have more money.

T

F

It's never good to just pay the minimum payment. The interest payments on the rest you have borrowed will end up costing you much more over time. Try to pay off your credit card balance as fast as you can. 

T

F

Other than interest paid on overdue amounts, the use of credit cards is free to the consumer.

T

F

This depends on the card - some have annual fees or usage fees.

T

F

Using a credit card is the same as borrowing money from the bank.

T

F

In practice this is the same, as in both cases you have to pay the money back. The difference is that you pay interest on the credit card only if you don't pay the whole amount after the grace period.

T

F

When borrowing, it is okay to have monthly payments as long as they are no more than 20% of your monthly net income.

T

F

Generally, loan payments (other than mortgage and car payments) should not exceed 10% of your monthly net income.

T

F

If you pay your credit card balance each month, the interest rate does not matter.

T

F

Absolutely - pay the full balance and you will not pay interest.

T

F

All credit cards are basically the same.

T

F

The rules and fees for cards vary from one issuer to another. Even two cards of the same type and "level"- "Gold VISA" for example - might have very different costs and options depending on which company offers them.  

 

Assessment

Teachers could evaluate the completed Shopping for Credit Cards Reproducible as an in-class assignment. Students could add it to their portfolio.

Assessment

Teachers could evaluate the completed Shopping for Credit Cards Reproducible as an in-class assignment. Students could add it to their portfolio.

Downloads
  • Credit and Credit Cards Anticipation Guide Reproducible [Google Doc] [PDF]
  • Shopping for Credit Cards Reproducible [Google Doc] [PDF]
Downloads
  • Credit and Credit Cards Anticipation Guide Reproducible [Google Doc] [PDF]
  • Shopping for Credit Cards Reproducible [Google Doc] [PDF]
Additional Resources
Additional Resources