Jack has three credit cards. One of the cards has an 18.9% interest rate and a balance of $5,000. Jack pays the minimum balanceof $200 each month. At this rate, it will take him a while to pay off the credit card. By the time it is paid off, Jack will have paidthe credit card company significant interest as well.

Jill pays her credit card balance in full each month. Her card has a low interest rate and does not charge any fees. In addition,Jill receives cash back, 3% on gas and groceries and 1% on all other purchases, as the reward for her credit card.

DISCUSSION QUESTIONS

1. Jack makes only the minimum payments on his credit card with the $5000 balance. How much will he end up paying in total on that credit card, and how much of that will be paid in interest? How long will it take him to pay off that credit card?
2. What is an introductory APR and why should you be aware of these types of rates?
3. Why should you never get a cash advance on a credit card, or exceed the credit limit?
4. Why do you think credit card companies market so heavily to college students?
5. Are all of your credit cards necessary? If so, why? If not, which one would you keep and why?