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Group Activity 13
Credit Cards

Read the following article that appeared on MSN.com - 4 Journeys Back From Hell

1.  The first story is about Danielle Rhoades.  The article states that she is paying $650 in interest payments on her card per month.  Do you think she is?  Explain.

2.  Let's assume that Paul Canady decided to stop using his credit after he accumulated a balance of $2,000 on his credit card (not $15,000) and it carried an interest rate of 15%.  His credit card company has also given a choice of minimum payments.

a.  Minimum payment option 1 - If he pays a minimum payment of 2% per month (not less than $25), what is his balance after 5 years?  What is the amount of interest he paid to date?  About how long will it take him to pay off his credit card if he continues to pay the minimum payment?  Paste the first 5 lines of you amortization table in your Word document.

b.  Minimum payment option 2 - If he pays a minimum payment of 3% per month (not less than $25), what is his balance after 5 years?  What is the amount of interest he paid to date? About how long will it take him to pay off his credit card if he continues to pay the minimum payment?  Paste the first 5 lines of you amortization table in your Word document.

c.  Is there a big difference minimum payment option 1 and minimum payment option 2?  Which one should Paul choose?  Explain.

 The Basics:  7 fast fixes for your credit score