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Algebra II: Credit Card Debt Analysis
Algebra II: Credit Card Debt Analysis

Algebra II: Credit Card Debt Analysis


“Why would the wealthiest nation on earth carry so much credit card debt?” This was the question posed to the Algebra 2 classes during the first couple of weeks of school. Students used their analytical and research skills to evaluate real-world problems in finance.

They discovered that the most common age range during which a person in the United States receives their first credit card is 18-21. They also found that typically as a person’s net worth increases, their revolving credit card debt also increases and that the average American carries nearly $8,500 in credit card debt. These were surprising findings for the classes, but perhaps the most surprising was how much carrying a credit balance really costs. 

The class set up a scenario with a person carrying $8,500 in credit card debt who wants to fully pay off the debt within five years. Using an amortization formula, the students determined the monthly payment would be approximately $230, causing the full five-year cost to be about $13,600. This amounts to more than $5,000 in interest payments. Students were amazed to see how much it costs to carry a balance! This spurred engaging discussion around why our culture tends to spend more than we make. Questions explored included: Could the cause be a lack of education? Lack of money? Lack of discipline? Some conjectured that perhaps it’s something deeper…we’ll continue this great conversation as we finish out our unit!

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