Lesson 6.

CREDIT CARDS

CARAGA STATE MMW MATHEMATICS IN THE

UNIVERSITY MODERN WORLD
 Topic Outline

How to Choose Credit Cards

Wisely
.
.
How to Properly Manage or Use
Credit cards
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 CHOOSING THE BEST CARD
Example: Among the three cards below, what is the
best card for you if,

APR Annual Fee

Credit Card 1 7% Php 2,000
. Credit Card 2 10% Php 1,000
.

. Credit Card 3 40% None

.

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 1. If you always pay your bill within the grace period ?

Answer :
Credit card 3. Since APR is irrelevant in this case and
the card offers no annual fee.
.

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 2. If you normally carry a balance of Php 4000?
Computing the total annual cost of each card, we
have:
Credit Card 1
I = PRT = (Php4000)(.07)(1) = Php280
Total cost = Php280 + Php2000 = Php2,280
Credit Card 2
.

. I = PRT = (Php4000)(.1)(1) = Php400

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.
Total cost = Php400 + Php1,000 = Php1,400
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 Credit Card 3
I = PRT = (Php4000)(.4)(1) = Php1,600
Total cost = Php1,600

Therefore, Credit Card 2 is the best card because it has

the least total cost.
.

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 3. How large would my balance (principal) need to be for
it to be worth choosing credit card 1 to get the lower
interest rate?

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 Compare credit card 1 and credit card 2:

P .07 1 + 2000 = P(.1)(1) + 1000

. 07P − .1P = 1000 − 2000

→ −.03P = −1000
.

. → P = 33,333.33
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 Compare credit card 1 and credit card 3:

P .07 1 + 2000 = P(.4)(1)

. 07P − .4P = −2000

→ −.33P = −2000
.

. → P = 6,060.6
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 This means that, the balance should be greater than or
equal to

Php 33,333.33

for it to be worth choosing credit card 1.

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 How to Properly Manage
.
.

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Your Credit Card
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 YES NO

NO

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 DO
1. Pay your bills on time.
2. Never spend up to or more than your limit.
3. Remember, credit cards are not extra cash!
4. Apply for and use three or fewer credit cards.
5. Only charge the amount you can pay at the end of
the month. Pay your entire balance at the end of the
month or as much as possible.
.
6. Use your credit card over a long period of time to
.
show consistency.
7. Read your monthly statement carefully and notify
.

. your credit card company of any errors right away.

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 DON’T
1. Pay your bills late.
2. Spend more than your limit.
3. Apply for and use many credit cards.
4. Keep a high balance on your credit card.
5. Constantly change credit cards.
6. Forget to review your monthly statement for
.
.
errors.
.

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 References

[1]

[2]

[3]

[4]

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[5] ‘’Credit Cards 101’’. [Online]. Available:
. https://www.thebalance.com/what-is-a-credit-card-960233
.

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 .