Card 1 Name of Card: What are the APRs? For purchases? For cash advances? For balance transfers?

If you pay late? What type of interest does the card have? Fixed or variable? Tiered? How long is the grace period? If you carry over a balance? If you pay off the balance each month? For cash advances? How is the finance charge calculated? One cycle or two? Including or excluding new purchases? Average or adjusted? Minimum finance charge? What are the fees? Annual Late-payment Over-the-credit-limit Set-up What are the cash advance features? Transaction fees Limits How much is the credit limit? What kind of card is it? Secured? Regular? Premium? Does the card offer other features? Rebates Frequent flier miles Insurance Other

Card 2

Card 3

___________ ___________ ___________ ___________ ___________ ___________ ___________ ___________ ___________ ___________ ___________ ___________ ___________ ___________ ___________ ___________ ___________ ___________ ___________ ___________ ___________ ___________ ___________ ___________ ___________ ___________ ___________ ___________ ___________ ___________ ___________ ___________ ___________ ___________ ___________ ___________ ___________ ___________ ___________ ___________ ___________ ___________ ___________ ___________ ___________ ___________ ___________ ___________ ___________ ___________ ___________ ___________ ___________ ___________ ___________ ___________ ___________ ___________ ___________ ___________ ___________ ___________ ___________ ___________ ___________ ___________ ___________ ___________ ___________ ___________ ___________ ___________

Name: Date: Credit Cards! As you graduate high school and embark on a college education, start a business, or join the workforce, money matters become more important. One of the decisions you will make involves credit cards. You will receive various offers from different banks for credit cards. Should you get a credit card? And if so, which one? Should you get more than one credit card? Buying now and paying later is pretty tempting! Before filling out that application, it's important to understand what you're getting yourself into.
You receive a credit card offer in the mail: borrow up to $2000 and pay only $40 a month. The interest rate is a little steep at 18% but the payment is still only $50 a month. Sounds like a great deal. You've been wanting to buy a new big screen TV with all the accompanying gadgets for ages, and now you can have it all for only $50 a month. Who COULDN'T afford this, right? Before you sign that offer and run out to purchase your new TV, let's look at the math and see how long it will take you to pay off this purchase at $50 per month, what you'll end up paying in interest, how long it will take to pay off the balance, and the total amount you'll end up paying for your $2000 TV. The minimum monthly payment on most credit cards is usually calculated as a certain percentage (often around 2 percent) of your total balance. First well look at paying a fixed $50 per month.

Lets go to http://www.bankrate.com/brm/calc/MinPayment.asp and use their credit card calculator. 1) Enter in the balance: $2,000 2) The annual interest rate: 18% 3) Enter in $50 in the fixed payment box, and click the button for fixed payment. 1. a. How many months would it take to pay off the balance for the $2,000 TV? b. How many years is that? __________ c. How much interest would you pay? ___________ d. What would then be the total cost of that $2,000 TV? _________ Lets go back and see what would happen if we pay only the minimum payment, calculated by the credit card company as 2.5% of your total balance. Click the minimum payment button, then calculate. 2. a. How many months would it take to pay off the balance for the $2,000 TV by paying only the minimum payment? ___________ b. How many years is that? __________ c. How much interest would you pay? _________ d. What would then be the total cost of that $2,000 TV? _________ e. What would your minimum payment be in month 6? ________ f. How much of that payment in month 6 would go towards paying the interest? _____ g. What is your balance after making 2 years of minimum payments? _______ Now lets go back and assume that you Oops! Just forgot to make a payment and your interest rate is changed to the default rate of 29%.

3) If you use FIXED payments of $50, (click the FIXED PAYMENT button) a. NOW how many months would it take to pay off the balance for the $2,000 TV? ____ b. How many years is that? _______ c. How much interest would you pay? _______ d. What would then be the total cost of that $2,000 TV? _________ Write a few sentences on how you feel about that.

4) But wait, it gets even worse. What if you make only the minimum payment? (click the MINIMUM PAYMENT button) Assume we are still paying just 2.5% of the balance for the minimum payment. a. How many months would it take to pay off the balance for the $2,000 TV by paying only the minimum payment? ___________ b. How many years is that? __________ c. Do people even live that long?! ________ d. How much interest would you pay? _________ e. What would then be the total cost of that $2,000 TV? _________ f. Go back and recalculate using a nice and pretty 7% interest rate. Now how long does it take to pay off the balance? g. Wow thats still kind of a lot, isnt it? h. How long would it take by making fixed payments of $75? (2,000 balance, 7% interest rate) __________ What conclusions can you draw from this exercise?

PART II Lets talk about finding a good credit card. Well start by looking at some of the worst credit cards. Read the short article at: http://credit.about.com/od/creditcardbasics/qt/worstcreditcard.htm 1) Name 2 things that make for an awful credit card: _________________________________________________________________________ _______________________________________________________________________ Lets look at all the different terms for credit cards: Read the article at http://www.federalreserve.gov/pubs/shop/default.htm 2) Whats the first step in choosing a credit card? 3) How do YOU plan to use a credit card? (Expect to pay your bill in full each month? Plan on carrying a balance? Expecting you might need cash advances?)

The article outlines very well what specific credit card terms are and what they mean. Lets compare a few cards and see how their terms look. Then well decide if we think its a good card or not. So lets look at some real cards that are offered to students. 1) Do a Google search for student credit cards, or go to CreditCards.com and click on Student Credit Cards on the left. Your task is to go credit card shopping! Choose 3 cards to compare. When you click on the application, look for the boxes containing the information on the credit card terms.

2) Use the information to fill out the chart on the back for a side by side comparison.
3) Based on your chart, which credit card do you think would work best for YOU?

4) Why do you think so?

Briefly list a few things you have learned from this exercise.

Extra: Search the web for information about topics such as Identity Theft, Credit Card Disputes, Credit Card Fraud, Credit Reports Write down a few things youve learned: