1.) Read, review, and discuss the following articles:
Are you credit card smart? Check out this article from the College Board. The High Cost of Using Credit Cards - What the credit card companies don't want you to know. Choosing A Credit Card from the Federal Reserve Board offers advice. Best Credit Cards for Students, choose them wisely
2.) Compare Credit Cards
Create a table to compare credit card offerings. Include the
following information for 4 different cards. Read the extra information and make appropriate comments. You can use this form from the Federal Reserve Board to help guide you. Each team member should
research one credit card.
Use Check Bankrate.com's Survey of Student Credit Cards, for information on credit cards.
3.) Calculate the Cost of Credit Card Purchases
1. Create your own table using this template.
Directions: Use the interest rate of 18% and an annual fee of $49 dollars
to complete this chart. In Month 1, there was a balance due of $3,000. The borrower will make a monthly payment of $200 and
keep new purchases at $115 per month for the year.
Calculate the interest for each month (balance x 1.5%). To obtain the balance
for the next month, subtract the payment from the balance and add the cost of new purchases plus monthly interset and fee.
For example: $3,009 - $200 = $2809 + $115 + $45.14 = $2,969.14
2. Calculate the total cost of purchasing a
laptop computer for $500 using the terms of the 4 credit cards you compared. Each team member should create a document
for the credit card they researched. For each card, include the following information:
A.)How long will it take to pay off $500 if you just make the minimum payment.
B.)How much will you have to pay every month if you want to pay off the
balance in 12 months.
C.) How much will you have to pay every month if you want to pay off the
balance in 24 months?
D.)What is the total cost (purchase price plus interest and fees) of these
3 scenarios - minimum payments, 12 months, or 24 months. Each team member should use 1 card to calculate the results.
Credit Card Calculators can be found on the Internet. Here's one from Kiplinger.com. Here's another one from CreditCardNation.com. Yet another can be found here.
Assignment 2 Production List
- Comparison of 4 Credit Cards
- Cost of Credit Card Purchase with $3,000 balance
- Cost of $500 Laptop Purchase (1 cards, 3 scenarios - per team member)
