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
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.
How does this fit in Common Core?
7.RP.3 Use proportional
relationships to solve
percent problems.
Examples: simple interest, tax
To Learn this…..
We
shop!
Image from MicroSoft Clip
Art
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!!! (Everyone’s 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.
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 you’ve learned.
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)
Group 1: Investigate what those
numbers mean..
Watch these two videos and fill in the
answers.
http://www.youtube.com/watch?v=qWWZ771YuA
www.youtube.com/watch?v=dlne-tAEV4c
Group 1: Now Compare the Scores:
Students fill in the table while watching the video.
Credit Score: 400
Credit Score: 600
Credit Score: 800
List likely behaviors List likely behaviors List likely behaviors
that lead to that
that lead to that
that lead to that
score
score
score
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 debt
Little to no debt
Always late making payments
Sometimes 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 savings
Substantial savings and
investments
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.
Group1: Investigating Credit Card
Interest Rates Continued
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.
Credit Score:
400
Credit Score:
600
Credit Score:
800
Investigating Credit Card Interest Rates:
students record their rate on their “credit card.”
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.
Credit Score:
400
Credit Score:
600
Credit Score:
800
Interest Rate is
29.99%
Interest rate is
14.99%
Interest rate is
9.99%
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
Group 1: All information is then
recorded on the student’s credit card
Iwil Taku Money
International Bank Credit Card
Name________________________________________
Credit Score Number
_________
Credit Rating
_________
Annual Interest Rate
_________
Monthly repayment Amount _________
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.
Don’t 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.
Sales Slip
Name_________________________
Item #
Catalog
Description
Price
Sales
Price
Number
Total Amt
Purchased With Tax
Total Amount Owed to Credit Card Company = ____________
Sales Slip Example:
Name___Joe Smith__________________
Item #
Catalog
Description
Price
Hammacker
Schlemmer
144x Binoculars
$199.95
47
KP-82960
Number
Purchased
Total Amt
With 7%
Tax
1
$160.46
Sales
Price
page #
KP-78069
% Discount
25%
$149.96
Hammacker
Schlemmer
Remote controlled
dueling helicopters
$99.95
0%
4 sets
$427.79
Melton
International
Tackle
PENN Fathom Star
Drag Reel
$449.99
15%
1
$404.28
77
839555
70
$377.83
Total Amount Owed to Credit Card Company = $992.53
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
Repayment!!!!
This part can easily be differentiated.
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.
Repayment!!!!
This part can easily be differentiated.
Group 2:
Same tasks as Group 1 plus compare each individual’s 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?
Repayment!!!!
This part can easily be differentiated.
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.
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.
Example of 1st Month’s Payment:
Joe Smith borrowed
Interest rate =
Monthly repayment amt =
First monthly payment =
He owes
Interest = ($972.53)(0.1599/12)(1) =
$992.53
14.99%
$20
$20.00
$972.53
$12.18
New amt owed = $972.53 + $12.18 = $984.71
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!
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.
Reflections: Answer these
questions in full sentences using
correct punctuation, spelling, and
grammar.
What are the consequences of having
a bad credit rating?
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.”
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 won’t affect your credit.”
What is good about a credit card?
Jacob, “You won’t 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.”
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 couldn’t have a house or a car
because you can’t pay them out of pocket.”
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.”
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.”
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.
They’ve used or created
technology in the form of a spreadsheet.
You’ve increased their 21st Century skills by educating them about a
real-world, common financial instrument.
Their written reflections show how important this real-life lesson is!
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.