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    CALCULATE Shopping With Interest 3.2 Under 6 WORD Document

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    This document discusses how interest charges from credit cards can significantly increase the real cost of purchases over time if only minimum monthly payments are made. It provides examples showing that a $60 video game that costs $102 total and a $229 TV that costs $409 when paid off with minimum monthly payments. Paying $20 per month instead of just the minimum on the TV reduces the total cost to $279. Strategies to reduce credit card interest include paying balances in full each month or paying more than the minimum amount due monthly.

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    CALCULATE Shopping With Interest 3.2 Under 6 WORD Document

    Uploaded by

    awsomepant2327
    113 views4 pages
    This document discusses how interest charges from credit cards can significantly increase the real cost of purchases over time if only minimum monthly payments are made. It provides examples showing that a $60 video game that costs $102 total and a $229 TV that costs $409 when paid off with minimum monthly payments. Paying $20 per month instead of just the minimum on the TV reduces the total cost to $279. Strategies to reduce credit card interest include paying balances in full each month or paying more than the minimum amount due monthly.

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    This document discusses how interest charges from credit cards can significantly increase the real cost of purchases over time if only minimum monthly payments are made. It provides examples showing that a $60 video game that costs $102 total and a $229 TV that costs $409 when paid off with minimum monthly payments. Paying $20 per month instead of just the minimum on the TV reduces the total cost to $279. Strategies to reduce credit card interest include paying balances in full each month or paying more than the minimum amount due monthly.

    Copyright:

    © All Rights Reserved
    Download as DOCX, PDF, TXT or read online from Scribd
    Download as docx, pdf, or txt
    113 views4 pages

    CALCULATE Shopping With Interest 3.2 Under 6 WORD Document

    Uploaded by

    awsomepant2327
    This document discusses how interest charges from credit cards can significantly increase the real cost of purchases over time if only minimum monthly payments are made. It provides examples showing that a $60 video game that costs $102 total and a $229 TV that costs $409 when paid off with minimum monthly payments. Paying $20 per month instead of just the minimum on the TV reduces the total cost to $279. Strategies to reduce credit card interest include paying balances in full each month or paying more than the minimum amount due monthly.

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    © All Rights Reserved
    Download as DOCX, PDF, TXT or read online from Scribd
    Download as docx, pdf, or txt
    of 4

    NGPF AcĒiviĒy Banfi

    Types of CrediĒ
    Spanish Version
    Teacher Tip
    Video

    CALCULATE: Shopping with


    Interest
    This activity will illustrate how even smaller purchases cost more when you purchase on a credit
    card and do not pay the balance in full each month. For this activity, we will use the credit card
    calculator from bankrate.com; open it in another window. We also make these assumptions:
    ● Your credit card’s interest rate (APR) is 19.9%.
    ● The minimum payment due each month is 3% of your starting balance.

    Part I: Practice with an Example


    1. Suppose you have a credit card bill of $1,275 for the month of October. If you pay the full
    balance before your bill is due, how much will you pay in interest?

    2. With your bill paid off and starting back at $0, the latest video game comes out and costs
    $60. You put it on your credit card and can’t afford to pay the whole bill all at once, so
    you make the minimum payment each month.
    a. How much is that minimum payment?

    b. Use the credit card calculator to determine how much total interest you’ll pay on
    this debt.

    c. When you include the purchase price and the interest, how much does the
    video game cost you in total?

    3. Assume your balance is back at $0. You desperately want a TV for your bedroom, but
    you don’t have any money saved. You put the $229 TV on your credit card and make
    the minimum monthly payment each month.
    a. How much is that minimum payment?

    www.ngpf.org Last updated:


    3/18/20 1
    b. Use the credit card calculator to determine how much total interest you’ll pay on
    this debt.

    c. When you include the purchase price and the interest, how much does the TV
    cost you in total?

    4. What happens if you buy that same TV but you pay $20 per month instead of just
    making the minimum monthly payment?
    a. Use the credit card calculator to determine how much total interest you’ll pay on
    this debt.

    b. When you include the purchase price and the interest, how much does the TV
    cost you in total?

    Part II: Choose Your Own Expenses


    5. Using your own knowledge or internet research on the initial cost of the items, complete
    the chart below to determine the total cost of your purchase if you use a credit card and
    do NOT pay the bill in full each month but rather make only the minimum monthly
    payment.

    Minimum
    Description of Total Cost
    Purchase Price Monthly Interest
    the Purchase of the Item
    Payment

    a new outfit to
    wear to a friend’s
    party

    www.ngpf.org Last updated:


    3/18/20 2
    the total cost of
    attending prom
    (attire, flowers,

    www.ngpf.org Last updated:


    3/18/20 3
    transportation, …)

    purchasing
    holiday or other
    gifts for your
    immediate family
    and 2 best
    friends

    YOUR CHOICE
    (>$100):

    YOUR CHOICE
    (>$500):

    Part III: Summarize


    5. Summarize the effect of credit card interest on the real cost of items.

    6. What are some strategies consumers can use to reduce the amount of interest they’ll
    pay on credit card debt?

    www.ngpf.org Last updated:


    3/18/20 4

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