Minds On

The cost of debt

Student Success

Think-Pair-Share

A chef has opened their first restaurant. The stovetop appliance is working, but it is not great and will need to be replaced sometime soon. It costs more money than they have saved, so they will need to go to the bank and ask if they can borrow some money (called a loan) to purchase the kitchen appliance.

The bank is willing to lend the chef the money they need, but when they pay the money back, they will have to pay an extra $12.00 a month until the money is all paid back.

Work with a partner, if possible, to discuss this situation and the concept of debt.

What would you do? Why might taking out a loan be a good idea? Why might it be a bad idea?

Note to teachers: See your teacher guide for collaboration tools, ideas and suggestions.

Action

Venn diagram

We will focus on two types of debt in this lesson: credit card and loan. Use the information in the infographic to help you identify the characteristics of credit cards vs. loans. You can use a speech-to-text program, read the information out loud, with a partner, or independently. After you have finished the reading, complete the Venn diagram in your notebook or an organizer of your choice, to demonstrate your understanding of the similarities and differences between these two types of debt.

This is a venn diagram. It has two circles that overlap creating a section in the middle.

Complete Venn Diagram in your notebook or using the following fillable and printable document.

Press the ‘Activity’ button to access the Venn Diagram.

Activity (Open PDF in a new window)

Terms to understand

Borrowed amount: This is the amount of money that someone has originally borrowed. This applies to all forms of debt such as a loan or credit card.

Interest rate: This is the amount that is charged to the person who is borrowing the money. This money is paid for borrowing money.

Time period to repay: Once money is borrowed, this is the amount of time decided for all of the money to be paid back, in full.

Consolidation

Debt comparison

Pick one type of debt (credit card or loan), and list the pros and cons using the Credit Card T-Chart or the Loan T-Chart in your notebook, or using the following printable and fillable document.

Discuss the following questions:

  • How might using a credit card and carrying debt be a good thing? How might it be a bad thing?
  • How might taking a loan and carrying debt be a good thing? How might it be a bad thing?
  • When might it be better to use a credit card? How about a loan?

Press the ‘Activity’ button to access the Credit Card T-Chart. 

Activity(Open PDF in a new window)
Pros of using a Credit Card Cons of using a Credit Card
  

Press the ‘Activity’ button to access the Loan T-Chart. 

Activity(Open PDF in a new window)
Pros of taking a Loan Cons of taking a Loan
  

Reflection

As you read through these descriptions, which sentence best describes how you are feeling about your understanding of this learning activity? Press the button that is beside this sentence.

I feel...

Now, record your ideas using a voice recorder, speech-to-text, or writing tool.