Filling Empty Pockets: Borrowing, Loans,
and Credit
In this lesson, students explore the concepts of borrowing and credit
with an emphasis on credit cards. Students learn how credit works, why
banks and other corporations extend credit, and what credit consumers
need to know, including how to preserve their access to credit and how
to avoid "credit trouble." Students also consider the real cost
of buying on credit, weighing the costs and benefits of credit purchases
against the option of budgeting and saving. Finally, students will consider
various real offers made by credit providers and decide which offer, among
several, is the best.
Grade Level:
Grades 9-12
Time Allotment:
Three 45-minute class periods
Subject Matter:
Financial Literacy, Mathematics, Compound interest, Exponential growth.
Learning Objectives
Students will be able to:
- Understand how credit works.
- Define terms such as credit, loan, annual percentage rate, interest,
and principal.
- Compare various credit offers to understand the ramifications of making
purchases with credit.
- Learn how to be a responsible credit consumer.
- Compare the “real costs” of purchasing on credit versus
delaying a purchase until enough money has been saved.
Standards:
McREL Economics Standard 7: Understands savings, investment, and
interest rates Level IV
http://www.mcrel.org/compendium/Benchmark.asp?SubjectID
=15&StandardID=7
1. Knows that an interest rate is a price of money that is
borrowed or saved and that interest rates are determined by the forces
of supply and demand.
3. Understands that higher interest rates provide incentives for people
to save more and to borrow less, and vice versa.
McREL Life Work Standard 3: Manages money effectively
http://www.mcrel.org/compendium/Benchmark.asp?SubjectID
=24&StandardID=3
1. Prepares and follows a budget
2. Makes forecasts regarding future income and expenses
3. Uses sound buying principles for purchasing goods and services
4. Understands credit and uses it effectively
NCTM Standards for Grades 9-12 http://standards.nctm.org/document/chapter7/index.htm
In grades 9-12, all students should—
- generalize patterns using explicitly defined and recursively defined
functions;
- use a variety of symbolic representations, including recursive and
parametric equations, for functions and relations;
- use symbolic expressions, including iterative and recursive forms,
to represent relationships arising from various contexts;
- draw reasonable conclusions about a situation being modeled.
This lesson was prepared by: Patrick Vennebush
