Credit Card Lesson Plan

Instructor: Sharon Linde

Sharon has a Masters of Science in Mathematics

Students need to understand how interest rates work before they hit the world of credit cards and loans. This video-based lesson plan defines effective annual rate, provides a formula, and walks students through an example. Drive home the concept with a real-world application activity.

Learning Objectives

After this lesson, students will be able to:

  • define effective annual rate
  • explain how effective annual rate is calculated
  • determine effective annual rate on real-world examples


1 hour


  • Credit card information that provides interest rates and calculation frequency, like applications or statement summaries

Key Vocabulary

  • Effective Annual Rate

Curriculum Standards

  • CCSS.Math.Content.HSA.REI.A.1

Explain each step in solving a simple equation as following from the equality of numbers asserted at the previous step, starting from the assumption that the original equation has a solution. Construct a viable argument to justify a solution method.

  • CCSS.Math.Content.HSA.REI.B.3

Solve linear equations and inequalities in one variable, including equations with coefficients represented by letters.


  • Connect students to the topic by asking them to share experiences with credit, whether from parents or more structured loans. Discuss interest terms and the concept of interest.
  • Tell students they will be learning to calculate for interest on credit cards.
  • Begin the video Effective Annual Rate: Formula & Calculations, pausing at 0:44. Discuss:
    • How do credit card companies make money?
    • How do you know how much interest credit card companies will charge?
  • Resume the video and pause again at 1:43. Ask:
    • What is the difference between the interest shown on credit cards and the one they charge you?
    • What difference does calculating interest more than once a year have on rates?
  • Resume the video and pause at 3:42. Provide students with a few more examples to calculate using the formula, then play the lesson summary. Answer any questions before moving on to the independent practice activity.

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