Credit Cards: Smart Tool or Debt Trap?

Equip your students with essential financial literacy through this complete KS5 lesson on credit cards. Designed for 16–18 year olds studying Business, Economics, BTEC, or PSHE, this resource explores credit cards in depth – combining clear explanations, real-world case studies, and advanced calculations with debate and reflection activities.

Comprehensive PowerPoint – covers definitions, worked examples, behavioural insights, and engaging activities.

Student Worksheet – structured tasks, space for calculations, debate prompts, and a written reflection opportunity.

Teacher Answer Guide – fully worked solutions for all maths tasks, case studies, and discussion points (including Average Daily Balance).

Editable files – adapt for your classes, add branding, or extend with your own examples.

Topics Covered:

What credit cards are and how they work
Key terms: APR, minimum payment, credit rating, debt spiral, Section 75 protection
How credit card interest is really calculated – daily compounding and the Average Daily Balance method
Worked examples: daily rates, monthly interest, and repayment scenarios
Case study: Tom’s £2,000 debt – why £50/month repayments don’t work
The minimum payment trap and debt spirals
Advantages vs disadvantages (protection, rewards, debt risks, marketing)
Behavioural economics: why people overspend
Debate: Should credit cards be banned for under-21s?
Reflection/homework task: analyse real adverts, calculate daily rates, and evaluate risks
Learning Outcomes:

Students will be able to:

Calculate interest from APR using daily and monthly rates.
Analyse repayment scenarios and identify the dangers of minimum payments.
Understand the impact of credit cards on financial stability and credit scores.
Weigh up both advantages and disadvantages of credit card use.
Critically evaluate ethical and behavioural aspects of consumer credit.
Format:

PowerPoint Presentation (.pptx)
Suitable for:

KS5 (16–18) Business Studies, Economics, Finance, or PSHE
A-Level enrichment lessons
BTEC units with a finance or sustainability focus
Sixth form assemblies or tutor sessions