Students will be able to define interest and credit.
Students will be able to describe some of the benefits and drawbacks of credit and interest.
Students will be able use credit and interest ideas in their simulation and trading.
 

Introduction—

1.      Raise your hand if you have ever heard of savings accounts.  Call on someone to explain a savings account to the class.  A savings account is a holding place at the bank for money you want to save.

2.      Has anyone ever heard of getting interest on the money in their savings account?  Can anyone describe what interest is?  Call on 2-3 people to explain what they think interest is.  Interest is money or goods that you receive for the use of your money or goods.

3.      Interest is often connected to credit.  Does anyone know what credit is? Hint: Think about what a credit card does.  Ask 2-3 students to explain what they think credit is.  Credit is a loan (that must be repaid) of money or goods to a person.

Lesson Steps—

1.     Tell the students the following story.  “One day Bob came to school  without a pencil.  He came up to my desk to ask me if he could borrow a pencil for the day.  I allowed him to borrow the pencil but when he brought it back the next day, I told him he needed to give me both my pencil and a candy bar.  Bob looked very puzzled but I told him I was just charging interest for the use of my pencil.”

2.   Ask the students what the interest was in this story.  Why did I charge interest?  The interest in this story was a candy bar and I charged interest so that Bob would be sure to give the pencil back to me. If he didn't, I would have something to replace the value of the pencil.

4.   Refer back to the introductory topic and explain that when people put money in the bank, the bank uses the money to help other people. They give the people a loan or credit.  They charge these people interest for the money they are using.  When you get interest in your savings account, it is money coming from people who used your money while it was in the bank.

5.      Illustrate the explanation on the board by connecting the savings, the bank, and the loan.  Show how interest comes from the person who receives the loan, to the bank, and then to the savings account owner.

6.      Refer back to the student’s knowledge about credit cards.  Explain that credit cards can be used like real money to buy things.  For example, if I went to Hy-Vee to buy groceries, I could use my credit card instead of writing out a check or paying in cash.  Do I ever have to pay for those groceries?  Of course.  I get a bill in the mail saying how much I owe the credit card company.  If I pay the bill on time, I don’t have to pay the company interest.  If I don’t pay the bill on time, the credit card company charges me interest (more money) for the money that they have loaned me to pay my grocery bill.

7.      Refer back to the bank diagram and show how credit cards work.

8.      Ask 3-5 students to explain interest and credit in their own words.  Check for understanding and clarify the topics as necessary. 

9.      Divide students into groups of 4-5.  Using what they know about credit and interest, ask them to think about some of the positives and negatives of these two ideas.  For example, Bob wasn’t very happy with me when he had to give back the pencil AND a candy bar.  What would happen if I charged a candy bar the first time Bob borrowed the pencil and a new pair of tennis shoes the next time?  What is wrong with that picture? 

10.  List the positives and negatives on the board.  Ask the students to go home and ask their parents what they think about credit and interest.  Write it down and be prepared to report in the next class period.

Closure—

                        Instruct students to take out their math journals.  In their own words,
                        write a definition for credit and a definition for interest.  Explain it
                        so that someone who doesn’t know anything about money or banks
                        will understand.  Then, write your own opinion about credit and
                        interest.  Do you think credit and interest are good things?  What do
                        you think the Bible says about credit and interest (this will be
                        discussed in the next lesson)?

Basic—Ask parents for their opinion of credit and interest.  Write it down and be prepared to report to the class.
Extension—Bible search: Look for Bible verses that relate to interest and credit. What do they say about these two ideas?  Some possible words to look up in the concordance include usury, wages, and interest.
 

Classroom participation and math journals.  Math journals should include both the definitions and the student’s opinion.  Carefully check for understanding.