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Lesson Plan by Maggie M. Larche M.A.

Credit and Interest

Pixton Lesson Plan on Credit and Interest

Make personal finance come to life with comics!

Including these awesome activities:
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Featured Layouts

When students complete the activities in this lesson plan, they will use the following comic layout types.

  • Poster
  • Comic Strip
  • Storyboard
  • Graphic Novel
  • Timeline

Your students will create amazing images like these in no time!

Pixton Lesson Plan on Credit and Interest
This free, printable Pixton lesson plan brings personal finance to life with comics and storyboards.
This free, printable Pixton lesson plan brings personal finance to life with comics and storyboards.

Featured Props

Credit and Interest

Student creations come alive with these themed objects – in addition to our library of over 3,000 props!

  • Arrow
    Arrow
  • Calendar
    Calendar
  • Cart
    Cart
  • Checkout
    Checkout
  • Convertible
    Convertible
  • Lock
    Lock
  • Money
    Money
  • Prop Letter
    Prop Letter
  • Scale
    Scale
  • Till
    Till
Print this Teacher Guide

Teacher Guide

Credit and Interest

Step 1Class discussion with students

Getting Started

Ask students to name every sort of loan they can. List them on the board. Examples will probably include mortgages, student loans, and car loans.

If they haven't listed them, you could also add credit cards, reminding them that this is a short-term loan that has to be repaid. You can also add home equity lines, business loans, personal loans, and medical loans.

Opening Discussion

Tell students that a loan is when one entity gives someone else money that must be repaid. So when someone takes out a mortgage, they are borrowing money from a bank in order to buy a house. Student loans are when someone borrows money to pay for higher education. Tell students that it's likely that many of them will be holding student loans in just a few years.

Explain that loans have to be repaid (unlike grants, which are gifts). Anyone who takes out a mortgage will then have a mortgage payment every month until the full loan is paid off. Once students graduate from college, they have to begin paying on their student loans.

Step 2Pixton comic-making activities
  • Make a Poster
    How Interest Works

    After the lesson, remind students that interest can also work in their favor, such as when the bank pays interest to savings account holders.

    View Activity
  • Make a Timeline, Comic Strip, or ...
    Building Good Credit

    Tell students that they can access their credit report for free once per year at each of the three credit report bureaus by visiting annualcreditreport.com. This free access is required by law.

    View Activity
  • Make a Storyboard, Comic Strip, or ...
    Credit Cards

    View Activity
  • Extension / Modification
    Student Loans (Extension / Modification)

    Many of your students will face the decision of whether or not to take out student loans soon. Have them create a mind map showing the positives and negatives of taking out a student loan. If it helps them to brainstorm, you can share that student loans typically charge 5-10% interest.

Step 3Concluding discussion with students

Loans are valuable financial tools when they are used wisely. Ask students what kind of loans they think are worth taking out and why. Answers may vary, but, in general, remind students that loans are best when they help you to invest in something valuable that will pay off over time.

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Pixton Activity: Credit and Interest 1 How Interest Works

Featured Layouts

  • Poster

Intro

When someone has money to spare, they can loan it out to someone else. In order to make it worth their while to do so, they charge interest. Interest is a percentage rate that specifies how much the borrower pays to borrow the loan.

So, if you borrowed money at 5%, you would have to repay the entire original amount of the loan (otherwise known as the principal) plus 5% of the outstanding amount every single year.

Because you have to pay interest, you should only borrow money if the benefit of doing so outweighs the extra interest you'd have to pay. This is why many people take out mortgages. There's a big benefit of owning your own home, both in security, finances, and general comfort. For these borrowers, the cost of the loan, or the interest rate, is worth it, so they borrow money to buy a house.

Essentially, the interest rate is the price of money.

There are a few factors which can influence interest rates. Some of them are the following:

  • Loan term: The longer the time to repay, the bigger the interest rate. That's because the lender is risking more to keep his money tied up in the loan for so long.
  • Creditworthiness of the borrower: People with good credit get lower interest rates than people with bad credit.
  • If the loan is secured: If the loan is on something physical that could be sold if the borrower defaults, the interest rate tends to be lower. Mortgages are an example. They are secured by the house that the borrower buys. If the borrower stops paying on the loan, the bank can take the house.

Instructions

Create a poster for a bank advertising its interest rates for mortgages. You should have a few different rates on the poster. Show rates for short term (10 years) vs long term (30 years) and rates for borrowers with good credit vs. bad. Think through which of these rates will be higher, and which will be lower.

Rubric: How Interest Works

Use this interactive rubric for easy, thorough assessment. It can even be used by students for self-assessment!

5 4 3 2 1
Understanding of Concepts • explains with extensive detail
• numerous connections made between concept and activity
• illustrations and descriptions are comprehensive
• explains with detail
• considerable connections made between concept and activity
• illustrations and descriptions have purpose
• explains with sufficient detail
• several connections made between concept and activity
• illustrations and descriptions have basic purpose
• explains with limited detail
• limited connections made between concept and activity
• illustrations and descriptions have little purpose
• explains with no detail
• very few connections made between concept and activity
• illustrations and descriptions have no purpose
Inquiry/Research Skills • Extensive use of details; support from a wide variety of sources
• Facts are accurate and complete
• Sources are accurately listed
• Considerable use of details; support from several sources
• Facts are accurate
• Sources are accurately listed
• Includes several relevant details; basic use of sources
• Facts are consistent
• Sources listed
• Some relevant details included; sources are limited
• Facts contain some inaccuracies
• No sources listed
• Very few relevant use of details
• Facts are inaccurate or false
• No sources listed
Communication • excellent communication of ideas
• statements are dynamic with extensive development
• descriptions are purposeful and well organized
• effective communication of ideas
• statements are powerful with appropriate development
• descriptions are concise and organized
• sufficient communication of ideas
• statements are consistent with increasing development
• descriptions are basic and organized
• poor communication of ideas
• statements are general with some development
• descriptions are limited and unorganized
• inadequate communication of ideas
• statement are general with little development
• descriptions are incomplete and unorganized
Style • correct sentence structure, grammar, spelling and punctuation; may include some errors in complex structures
• panels are highly organized with exceptional use of supporting details
• few errors in basic sentence structure, spelling, punctuation, or grammar; errors do not interfere with meaning
• panels have excellent organization with effective use of supporting details
• occasional errors in sentence structure, spelling, punctuation, or grammar; errors rarely interfere with meaning
• panels have basic organization and supporting details
• several errors in sentence structure, spelling, punctuation, or grammar; errors may make parts hard to follow
• panels have limited organization and supporting details
• repeated errors in basic sentence structure, spelling, punctuation, or grammar often make the writing hard to understand
• panels are unorganized and lack supporting details
Total

Example Poster

Mortgage Advertisement by Student
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Pixton Activity: Credit and Interest 2 Building Good Credit

Featured Layouts

  • Comic Strip
  • Storyboard
  • Graphic Novel
  • Timeline

Intro

Your credit history is one of the biggest factors that determines whether or not you can get loans that you need. Banks and other lenders take a look at your credit to see if you are a good risk or not.

So how do you build good credit? By simply making smart money decisions. Pay your bills on time, whether they be other loan payments or bills like utilities and rent. Don't overuse credit cards to show that you are a responsible user of credit.

Your credit history is boiled down into your credit score. Credit scores typically fall from 300 - 900, with higher scores being better. The exact formula for how this score is calculated is not known, but it is based on several factors. In general, if you use money wisely over time, your credit score will grow, and you will be eligible for better interest rates and loan offers.

Your credit history affects more than just your access to loans, however. When you apply for a job or rent an apartment, they may also check your credit.

Instructions

Draw a comic showing how you plan to be a responsible user of credit during your first years out of high school. What wise money decisions will you make?

Rubric: Building Good Credit

Use this interactive rubric for easy, thorough assessment. It can even be used by students for self-assessment!

5 4 3 2 1
Understanding of Concepts • explains with extensive detail
• numerous connections made between concept and activity
• illustrations and descriptions are comprehensive
• explains with detail
• considerable connections made between concept and activity
• illustrations and descriptions have purpose
• explains with sufficient detail
• several connections made between concept and activity
• illustrations and descriptions have basic purpose
• explains with limited detail
• limited connections made between concept and activity
• illustrations and descriptions have little purpose
• explains with no detail
• very few connections made between concept and activity
• illustrations and descriptions have no purpose
Inquiry/Research Skills • Extensive use of details; support from a wide variety of sources
• Facts are accurate and complete
• Sources are accurately listed
• Considerable use of details; support from several sources
• Facts are accurate
• Sources are accurately listed
• Includes several relevant details; basic use of sources
• Facts are consistent
• Sources listed
• Some relevant details included; sources are limited
• Facts contain some inaccuracies
• No sources listed
• Very few relevant use of details
• Facts are inaccurate or false
• No sources listed
Communication • excellent communication of ideas
• statements are dynamic with extensive development
• descriptions are purposeful and well organized
• effective communication of ideas
• statements are powerful with appropriate development
• descriptions are concise and organized
• sufficient communication of ideas
• statements are consistent with increasing development
• descriptions are basic and organized
• poor communication of ideas
• statements are general with some development
• descriptions are limited and unorganized
• inadequate communication of ideas
• statement are general with little development
• descriptions are incomplete and unorganized
Style • correct sentence structure, grammar, spelling and punctuation; may include some errors in complex structures
• panels are highly organized with exceptional use of supporting details
• few errors in basic sentence structure, spelling, punctuation, or grammar; errors do not interfere with meaning
• panels have excellent organization with effective use of supporting details
• occasional errors in sentence structure, spelling, punctuation, or grammar; errors rarely interfere with meaning
• panels have basic organization and supporting details
• several errors in sentence structure, spelling, punctuation, or grammar; errors may make parts hard to follow
• panels have limited organization and supporting details
• repeated errors in basic sentence structure, spelling, punctuation, or grammar often make the writing hard to understand
• panels are unorganized and lack supporting details
Total
Print this Activity

Pixton Activity: Credit and Interest 3 Credit Cards

Featured Layouts

  • Comic Strip
  • Storyboard
  • Graphic Novel
  • Timeline

Intro

There are two main kinds of loans: installment and revolving. Installment loans are what you think of when you think of a typical loan. You take out a loan at one time and then have a set period of time to pay it back. Car loans and mortgages are installment loans.

Revolving credit is different. Unlike a one-time deal, like installment loans, revolving credit is something that you can draw from over and over again. It's still a loan that has to be repaid, but you have more chances to borrow.

The most common type of revolving credit currently is a credit card. With a credit card, you borrow from the credit card company to make a purchase. At the end of the month, you are presented with a bill for all of the purchases that you made the previous month.

  • If you pay this off in full, you will not owe any interest.
  • If you only make the minimum payment, you will be charged interest on your purchases.

Credit card interest rates are usually much higher than installment loans. While a mortgage might charge 4%, a credit card could charge up to 25%. You'll also pay a fee if you are late or miss a payment. With such high interest rates and fees, it is very easy to get in over your head quickly.

Instructions

Create a comic which shows someone making poor decisions with his credit cards. Is he able to pay off the purchases? What happens if he does not? What are the long term effects of the poor decisions?

Rubric: Credit Cards

Use this interactive rubric for easy, thorough assessment. It can even be used by students for self-assessment!

5 4 3 2 1
Understanding of Concepts • explains with extensive detail
• numerous connections made between concept and activity
• illustrations and descriptions are comprehensive
• explains with detail
• considerable connections made between concept and activity
• illustrations and descriptions have purpose
• explains with sufficient detail
• several connections made between concept and activity
• illustrations and descriptions have basic purpose
• explains with limited detail
• limited connections made between concept and activity
• illustrations and descriptions have little purpose
• explains with no detail
• very few connections made between concept and activity
• illustrations and descriptions have no purpose
Inquiry/Research Skills • Extensive use of details; support from a wide variety of sources
• Facts are accurate and complete
• Sources are accurately listed
• Considerable use of details; support from several sources
• Facts are accurate
• Sources are accurately listed
• Includes several relevant details; basic use of sources
• Facts are consistent
• Sources listed
• Some relevant details included; sources are limited
• Facts contain some inaccuracies
• No sources listed
• Very few relevant use of details
• Facts are inaccurate or false
• No sources listed
Communication • excellent communication of ideas
• statements are dynamic with extensive development
• descriptions are purposeful and well organized
• effective communication of ideas
• statements are powerful with appropriate development
• descriptions are concise and organized
• sufficient communication of ideas
• statements are consistent with increasing development
• descriptions are basic and organized
• poor communication of ideas
• statements are general with some development
• descriptions are limited and unorganized
• inadequate communication of ideas
• statement are general with little development
• descriptions are incomplete and unorganized
Style • correct sentence structure, grammar, spelling and punctuation; may include some errors in complex structures
• panels are highly organized with exceptional use of supporting details
• few errors in basic sentence structure, spelling, punctuation, or grammar; errors do not interfere with meaning
• panels have excellent organization with effective use of supporting details
• occasional errors in sentence structure, spelling, punctuation, or grammar; errors rarely interfere with meaning
• panels have basic organization and supporting details
• several errors in sentence structure, spelling, punctuation, or grammar; errors may make parts hard to follow
• panels have limited organization and supporting details
• repeated errors in basic sentence structure, spelling, punctuation, or grammar often make the writing hard to understand
• panels are unorganized and lack supporting details
Total

Example Comic Strip

Poor Credit Choices by Student

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