Mathematics: Credit Cards as an Application of Exponential Equations

Title: The Mathematics of Credit Cards (as an application of exponential equations)
Discipline(s) or Field(s): Mathematics
Authors: Kirthi Premadasa, Paul Martin, Clare Hemenway, University of Wisconsin-Marathon County
Submission Date: December 14, 2008

Goals of the lesson:

  1. Students will learn how to make basic interest calculations, when calculating the monthly payments and the monthly interest charges on credit card balances.
  2. Students will learn what “amortization” means and will learn to fill in an amortization table.
  3. Students will use logarithms to solve the exponential equations encountered in the calculations of the payment periods for different payment methods.
  4. Students will develop an insight to the advantages and the disadvantages of the different payment methods.