About the Activity

Credit cards are convenient and can be great tools if used wisely. But it’s important to understand how they work and their potential pitfalls. This activity introduces the cost of using credit by showing kids the real amounts that the same item costs when it’s paid for in different ways.
Grades: 7 – 12
Topic: Financial Literacy
Estimated Time: 25 Minutes
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These simple materials—along with a few specialty supplies—will get you started.

  • Pre-made printout
  • Pen or pencil
  • An internet-connected smartphone, tablet, or computer
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Activity Steps

  1. On the “What Does it Really Cost?” chart (found on PAGE 3 OF THIS PDF), begin with the first section, “Buying Wireless Headphones.”
  2. For each line, multiply the dollar amount by the number of months to determine how much each person really paid for their wireless headphones, and enter that in the first column.
  3. Then subtract the original amount of $200 from the total amount paid to determine how much each person paid in interest. Enter that amount in the “Dollar Cost of Using Credit” column.
  4. For the next activity, “Buying Sports Equipment,” calculate the total amount paid when using each option.
Adult and youth learning financial literacy skills
  1. In Option 3 and Option 4, subtract the original amount of $200 from the total amount paid to determine how much each person paid in interest.

Bonus Activity (Optional)
Older youth can open credit cards, usually with an adult co-signer to ensure responsible use. If you’re comfortable, encourage teens to search online for “student credit cards” to see some of their options and features, such as cash back. Ask questions, including: What is the range of interest rates for student credit cards? Do you think it would be a good idea to open a student credit card? What are the risks and what are the advantages?

Credit is a financial tool and there are many advantages and pitfalls when using credit. Learning about the cost of credit is only the first step. Learn how to make smart financial decisions when using a credit card by completing the activity in MY FINANCIAL FUTURE, called Apply Consumer Skills to Purchase Decisions.

Reflection Questions
Questions for your kids and teens.

  1. Some purchases are so big that people usually have to use credit for them. Can you give some examples?
  2. Do you think you should have a credit card at your current age? Why or why not?
  3. What is a good age to get a first credit card?
  4. What would you use a credit card for?
  5. What might happen if you can’t make a credit card payment on time?
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Investigate and Explore
Take what you've learned to the next level to learn more and explore the possibilities.

Credit makes buying things—or paying for experiences, like tickets to a festival—quick and easy. But borrowing money costs money. If you don’t pay off your purchase in full by the first due date, it’s going to cost you more than the original price. Your credit card experience can vary greatly depending on factors like the interest rate, and whether you keep a running balance or pay it off in full.

Mom and daughter doing a financial literacy activity

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