Name: ______________________ Date: __________ Partner: ______________________
Rates on this sheet are typical for 2026 and marked [update]. The people are made up.
My do now guess: a $500 phone at $25 a month on a store card will cost $__________ in total.
Part A: Debit vs credit, side by side
| Debit card | Credit card | |
|---|---|---|
| Whose money is it? | ||
| When does it leave? | ||
| Is there a bill? | ||
| Is there interest? | ||
| What if the card is stolen? | ||
| Does it build a credit score? |
Credit is _________________________________________________________________
Debt is __________________________________________________________________
Interest is _______________________________________________________________
Part B: Simple interest on $500
The formula: I = P x r x t
(interest = amount borrowed x rate as a decimal x years)
Rates as decimals: 5 percent = 0.05. 15 percent = 0.15. 24 percent = 0.24.
Worked example: $500 at 5 percent for 1 year. $500 x 0.05 x 1 = $25. Total owed: $500 + $25 = $525.
| Rate [update] | What it is like | One year: interest | One year: total owed | Three years: interest | Three years: total owed |
|---|---|---|---|---|---|
| 5 percent | a good car loan | $500 x 0.05 x 1 = $______ | $______ | $500 x 0.05 x 3 = $______ | $______ |
| 15 percent | a credit union card | $500 x 0.15 x 1 = $______ | $______ | $500 x 0.15 x 3 = $______ | $______ |
| 24 percent | a typical bank credit card | $500 x 0.24 x 1 = $______ | $______ | $500 x 0.24 x 3 = $______ | $______ |
At which rate does three years of interest cost more than half the phone? ______________
(Grade 6: one-year columns only.)
Part C: Two more loans
- Ines borrows $1,200 on a store card at 15 percent [update] and pays nothing for two years. Interest: $______ x ______ x ______ = $______. Total owed: $______.
- A used car loan: $8,000 at 5 percent [update] for four years. Interest: $______ x ______ x ______ = $______. Total paid: $______.
- Which loan cost more in dollars? ______ Which cost more as a percent of what was borrowed? ______ How can both be true?
Part D: The minimum payment trap
Leo puts a $500 phone on a credit card at 24 percent APR [update]. That is 2 percent a month. Each month the card adds 2 percent of the balance, then his payment comes off.
The first three months at $25 a month (follow along on the board):
| Month | Balance at start | Add 2 percent | Pay $25 | Balance at end |
|---|---|---|---|---|
| 1 | $500.00 | $10.00 | $25.00 | $485.00 |
| 2 | $485.00 | $9.70 | $25.00 | $469.70 |
| 3 | $469.70 | $9.39 | $25.00 | $454.09 |
Three months in, Leo has paid $75 and still owes $454.09. Copy the finished results from the slide:
| Plan | Months to pay off | Total interest | Total paid for the $500 phone |
|---|---|---|---|
| $25 a month (the minimum) | |||
| $50 a month | |||
| Paid in full the first month |
My recommendation (two sentences, with the numbers):
My do now guess was $______. The real number was $______. I was off by $______.
Part E: The credit score, in one paragraph
A credit score is a number from ______ to ______ that shows ________________________________.
It goes up when I ____________________________________ and ____________________________________.
It goes down when I ____________________________________ or ____________________________________.
It matters because ______________________________, ______________________________, and sometimes ______________________________ look at it.
Grade 8 stretch
- Do months 4 and 5 of the $25 plan by hand and check them against the pattern.
- What monthly payment would clear the $500 in ten months? (Try $55, then $56.) About how much interest is that?
- Three cards: a bank card at 24 percent, a store card at 29 percent, a credit union card at 15 percent [update]. A person with a good score should pick ______________ because ______________________________.
Exit card (3-2-1)
3 differences between credit and debit: ________________, ________________, ________________
2 things that move a credit score: ________________, ________________
1 number: the total cost of the $500 phone at $25 a month: $________
Teacher key
Part A: Debit: your money; right now; no bill; no interest; a stolen card drains your account; no. Credit: the bank's money, borrowed; when you pay the bill; yes, every month; yes, if not paid in full; you can dispute the charge and the bank's money is at risk; yes. Credit is borrowing money with a promise to pay it back. Debt is money you owe. Interest is the price of borrowing (or, on savings, the price the bank pays you; Lesson 2.12).
Part B: 5 percent: $25, $525; $75, $575. 15 percent: $75, $575; $225, $725. 24 percent: $120, $620; $360, $860. Three years costs more than half the phone ($250) at 24 percent ($360); at 15 percent it is $225, just under.
Part C: 1. $1,200 x 0.15 x 2 = $360; total $1,560. 2. $8,000 x 0.05 x 4 = $1,600; total $9,600. 3. The car loan cost more in dollars ($1,600 vs $360); the store card cost more as a percent (30 percent of what was borrowed over two years vs 20 percent over four years). Both are true because the car loan is bigger and longer; the rate tells you the price per dollar per year, the dollars tell you the bill.
Part D: $25 a month: 26 months; $144.94 interest; $644.94 total. $50 a month: 12 months; $63.50 interest; $563.50 total. Paid in full: 1 month; $0; $500. Recommendation, "got it" example: "Pay $50 a month because it is done in 12 months and costs $63.50 in interest instead of $144.94. Paying it off in full is better still if he has the $500." Month-by-month check for the stretch: month 4: $454.09 + $9.08 = $463.17 minus $25 = $438.17; month 5: $438.17 + $8.76 = $446.93 minus $25 = $421.93.
Part E: 300 to 850; how well you have paid people back; pay on time every month, use a small part of the limit; pay late, max out a card (also applying for too much at once); a landlord, a car lender, an employer.
Grade 8 stretch: 2. About $56 a month clears it in ten months; total paid about $557, so interest about $57. 3. The credit union card at 15 percent; the lowest rate costs the least if a balance is ever carried.
Exit: any three from Part A; any two from Part E; $644.94.