1. Go to 2. CLICK on the first box to apply for the PLATINUM CARD.

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1 Name: Date: Directions: 1. Follow the directions on the worksheet to complete this online activity. 2. Complete Part 1 and Part Turn your completed worksheet into your classroom teacher. Part 1: Scenario: Joseph was very excited because he recently got his first job and his first paycheck! Joseph couldn t wait to buy all of the things that he had been dreaming about for years. He wanted a new notebook computer, video game, skateboard, and front-row concert tickets. He did not have enough money to buy all of these things, so he applied for a credit card. Joseph knew that he had more than enough money to make the minimum payment on a credit card, so he went right out and bought the items he wanted. Let s see what impact this type of spending will have on Joseph s finances. 1. Go to 2. CLICK on the first box to apply for the PLATINUM CARD. 3. When the text box pops up, read the information and CLICK YES. 4. Enter Joseph s name in the text box that comes up and CLICK SUBMIT. 1

2 5. Now it s time to shop! Click and drag the items that Joseph wanted into the shopping cart. (Note: You will have $3.00 left over.) Skate Board Laptop Computer Video Game Front Row Concert Tickets 6. When you have all of Joseph s items in the cart, CLICK CHECKOUT. 7. Look at the Account Summary. Click MAKE MINIMUM PAYMENT. 8. Look at the Platinum Card Payment History. Record the information in Table 1 below. 2

3 Table 1: Payment History A for Platinum Card Credit limit: You spent: Interest charges: Your monthly payment: Your final payment: Months required to pay in full: Compare the original cost, versus total cost with interest, for each item purchased. Do this by looking at the box for each item, recording the information in Table 2 below, and then clicking next. Record the original cost and total cost in Table 2 below. 3

4 Table 2: Payment History A Item: Notebook Computer Item: Front-row Concert Tickets Item Skateboard: Item: Video Game Answer the following questions based on the information you found: A. What was the subtotal of Joseph s original purchases (no interest)? B. What was the total cost of all Joseph s purchases (with interest)? C. How much money did Joseph waste on interest? (Subtract answer A from answer B.) Part 2 You can see that making the minimum payment forced Joseph to waste a lot of money by paying lots of interest. Joseph would have saved a lot of money in the long run if he had saved up more of his paycheck before making his purchases, so that he could afford to make greater payments. Let s see what would happen if Joseph budgeted better and made greater payments. 4

5 1. Delete the old minimum monthly payment. Enter a NEW MONTHLY PAYMENT of $150. Click RECALCULATE. 2. Record the new Payment History information in Table 3 below. Table 3: Payment History B for Platinum Card Credit limit: You spent: Interest charges: Your monthly payment: Your final payment: Months required to pay in full: Compare the original cost, versus total cost with interest, for each item purchased. Do this by looking at the box for each item, recording the information in Table 4 below, and then clicking next. Record the original cost and total cost in Table 4 below. 5

6 Table 4 Payment History B Item: Notebook Computer Item Skateboard: Item: Front-row Concert Tickets Item: Video Game 3. Answer the following questions based on the information you found: A. What was the subtotal of Joseph s original purchases (no interest)? B. What was the total cost of all Joseph s purchases (with interest)? C. How much money did Joseph waste on interest? (Subtract answer A from answer B.) 4. When Joseph made the minimum monthly payment of $, he paid $ in interest payments. 5. When Joseph made a higher monthly payment of $, he paid $ in interest payments. 6. When comparing the amounts of money spent on interest (in #4 and #5 above), we can see that Joseph would have saved $ in the long run by making a higher monthly payment. 6