Interest, Loans and Credit

Gr 7—10—A teen hostess describes her efforts to obtain money to replace her old and unreliable bicycle. She has been given a gift of $1000 toward the purchase of a new $2000 bike and weighs the options of obtaining a loan or using a credit card to cover the remaining cost. The program is divided into five chapters: introduction, comparing simple and compound interest, how compound interest works, loans with interest, and interest free options. Graphics of the mathematical formulas supplement the narration as the teen calculates how long she might have to wait to accumulate enough money in a regular savings account vs. one offering compound interest. It is eye-opening for viewers to realize that it would take several years for her to generate $1000 of interest in either case. Her next step is to investigate a personal loan vs. low rate and low fee credit cards, and calculate the impact of annual fees. A final option of using a store credit card or a promotional payment plan explains how impotant it is to understand the specific terms and time lines that affect repayment. The program shows the teen reviewing her options and settling on a no-interest loan from her father that she will pay back over time. The Australian teen's cheeky humor and use of phrases such as "fortnightly payments" will not detract from a universal message to teens to do the math before they use a charge card or borrow money.—Vicki Reutter, Cazenovia Jr. Sr. High School, NY