CALCULATE: Shopping with Interest
CALCULATE: Shopping with InterestThis activity will illustrate how even smaller purchases cost more when you purchase on a credit card and do not pay the balance in full each month. For this activity, we will use the credit card calculator from ; open it in another window. also make these assumptions:Your credit card’s interest rate (APR) is 19.9%.The minimum payment due each month is 3% of your starting balance.Suppose you have a credit card bill of $1,275 for the month of October. If you pay the full balance before your bill is due, how much will you pay in interest? The latest video game comes out and costs $60. You put it on your credit card and can’t afford to pay the whole bill all at once, so you make the minimum payment each month. How much is that minimum payment? Use the credit card calculator to determine how much total interest you’ll pay on this debt. When you include the purchase price and the interest, how much did the video game end up costing you?Using your own knowledge or research on the initial cost of the items, complete the chart below to determine the total cost of your purchase, if you use a credit card and DON’T pay the bill in full each month but rather make only the minimum monthly payment.Description of the PurchasePurchase PriceMinimum Monthly PaymentInterestTotal Cost of the Itemthe total cost of attending prom (attire, flowers, transportation)4K TV Summarize the effect of credit card interest on the real cost of items.Explain how it is that many Americans find themselves swimming in credit card debt, unable to pay down their debt quickly.RESEARCH: Credit Card Laws Use the internet to find credible answers to questions on these 3 major credit card laws that apply to US consumers. For each answer, be sure to cite your source with the name of the website you used.Credit Card Accountability, Responsibility and Disclosure, or Credit CARD, Act of 2009Under this act, how many days notice does your credit card need to give you in order to increase rates? Under this act, how many days need to occur between when your bill is mailed and when you have to pay the minimum balance? How does this act impact college students who want to open a credit card?Fair Credit Billing ActUnder this act, how many days do you have to dispute a charge on your credit card? Under this act, what’s the maximum amount you’re liable for if a stranger uses your credit card without authorization? Under this act, how do you report fraudulent or incorrect charges to your credit card company? Truth in Lending ActList at least 4 things your credit card company must clearly disclose to consumers. ................
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