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Credit Card Debt Simulation


December 08, 2004

Found In: experiments & simulations, math

When it comes to teaching kids about finances, parents and teachers can never do enough. Credit cards, especially, can be such a trap in which so many young people get caught up. I created a Credit Card Debt Simulation in which every day, for 20 days, students are given 6 months’ worth of credit card charges. At the end of the 20 days, they have 10 years worth of simulated credit card debt. No two people receive the same charges. (I used an online random number generator and a mail merge to create 600 months worth of charges to keep all the students different.)

The students then have to figure in an annual fee and late penalties, and then create a spreadsheet that calculates the interest, minimum payment, and month-by-month balance for all 10 years. Next they write a paper reflecting on many questions, including:

  • How long will it take to pay off what you owe if you only make the minimum payments?
  • How much total interest will you pay?
  • How long will it take if you agree to pay a certain amount, instead of the declining minimum payment?

This in-depth activity really impresses upon the students the importance of using credit cards wisely.

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