Financial literacy class: America’s torrid affair with credit cards

This article picked by a teacher with suggested questions is part of the Financial Times free schools access programme. Details/registration here.

Read below a selection of FT articles picked by financial literacy teachers with classroom questions/discussion points, mapped by theme. View the full selection here.

Also explore the classroom resources produced by the FT’s Financial Literacy and Inclusion Campaign charity.

Specification:

Budgeting and Consumer Skills

Summary

Credit cards have been a big part of how Americans buy things for many years. This article explains how credit card debt went up over time, especially in the past few years. When prices started rising faster than wages, people used their credit cards more to cover the difference, even though the interest rates were high. Credit card companies keep rates high because they know people rely on credit, and this has helped them make a lot of money. Understanding how credit card interest works can help people make better financial choices.

Click to read the article and then answer the questions:

America’s torrid affair with credit cards

Questions

• Why do you think credit card companies keep interest rates high, even when other rates go down?

• How do you think using a credit card can change the way people spend money compared to cash or debit?

• What might make people continue to rely on credit cards, even though they have to pay high interest?

• If interest rates keep going up, how do you think it would affect how often people use their credit cards?

• What are some ways people could manage their spending without depending so much on credit cards?

Tim Ranzetta, Next Gen Personal Finance