1. Making the Minimum Payment Why it is exactly what the credit card companies want you to do

2. Opening Activity Why do credit card companies only want you to make “the minimum payment?” Why do credit card companies only want you to make “the minimum payment?”

3. Learning Objective Describe how making minimum payments on a credit card is very costly Describe how making minimum payments on a credit card is very costly

4. 3 minute Video Clip 3 minute Video Clip Minimum payments explained with water: http://www.teachertube.com/viewVideo.p hp?video_id=223329&title=Credit_Card_D ebt_Explained_with_Water Minimum payments explained with water: http://www.teachertube.com/viewVideo.p hp?video_id=223329&title=Credit_Card_D ebt_Explained_with_Water http://www.teachertube.com/viewVideo.p hp?video_id=223329&title=Credit_Card_D ebt_Explained_with_Water http://www.teachertube.com/viewVideo.p hp?video_id=223329&title=Credit_Card_D ebt_Explained_with_Water

5. Student Activity Sheet Read the story problem first Read the story problem first Then look at the minimum payment schedule Then look at the minimum payment schedule Question #1 has been done for you to save time: Question #1 has been done for you to save time: Adding up all the 154 “interest paid” payments equals $1,119.57 Adding up all the 154 “interest paid” payments equals $1,119.57

6. Student Activity Sheet With a partner answer questions 2-7 With a partner answer questions 2-7

7. Student Activity Answers 1. 1, 119.57 2. C: 154 months of payments divided by 12 equals 12 years and 10 months 3. C: Month 111 ($5.08 principle v. $4.92 interest) 4. Yes (B = $10.00 month 90-153 the payment stays at $10.00) 5. Yes, monthly interest paid the first month ($14.41) divided by original balance ($910) multiply times 12 months equals 19%

8. Additional Discussion Question It takes Zach close to 13 years to pay off his $910 debt. It takes Zach close to 13 years to pay off his $910 debt. What would Zach probably do with his credit card during those 13 years? What would Zach probably do with his credit card during those 13 years? What would have happened to Zach’s account had his company not had a monthly minimum payment of $10? What would have happened to Zach’s account had his company not had a monthly minimum payment of $10?

9. Exit Activity If you are going to use a credit card what sort of payment should you make each month? If you are going to use a credit card what sort of payment should you make each month? Why is it so costly to only make the minimum payment each month? Why is it so costly to only make the minimum payment each month? What financial risk does it pose as well? What financial risk does it pose as well?

10. Summary The more you spend the more interest they make The more you spend the more interest they make The less you pay the more interest they make The less you pay the more interest they make

11. Additional Time Play with online credit card payment calculators Play with online credit card payment calculators Cash course’s site: http://www.calcxml.com/calculators/how- long-will-it-take-to-pay-off-my-credit- card?skn=124 Cash course’s site: http://www.calcxml.com/calculators/how- long-will-it-take-to-pay-off-my-credit- card?skn=124 http://www.calcxml.com/calculators/how- long-will-it-take-to-pay-off-my-credit- card?skn=124 http://www.calcxml.com/calculators/how- long-will-it-take-to-pay-off-my-credit- card?skn=124