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Instructions:
Discussion On Interest Rates Mounting Consumer Debt
Assignment 1: Discussion—Interest Rates
Interest rates are a fact of life that you will encounter both professionally and personally. One area of interest rates that you may be most concerned about are those applied to credit card debt. Let’s say that you had $2400 on a particular credit card that charges an annual percentage rate (APR) of 21% and requires that you pay a minimum of 2% per month. Could you determine the minimum monthly payment? The minimum monthly payment would simply be 2% times the balance as shown:
2% x $2400.00 = 0.02 x $2400.00 = $48.00
So, your monthly minimum payment would be $48.00. Do you know how much of this is being applied to the principal and how much is going to interest? To determine this, you would need to know the simple interest formula.
I = Prt
In this formula, I = interest, P = is the principal (balance), r = is the annual percentage rate, and t is the time frame. To determine the interest per month on a balance of $2400 with an APR of 21%, you would let P = $2400, r = .21, and t = 1/12 (1 month is 1/12 of a year). The interest paid each month would then be:
I = Prt = ($2400) (.21)(1/12) = $42.00
So, you are paying $42.00 per month towards interest. With a minimum payment of $48.00, that means you are paying $6.00 per month towards the balance ($48.00 – $42.00 = $6.00). No wonder it takes so long to pay off a credit card!
Research interest rates and consumer debt using the Argosy University online library resources and the Internet.
Based on the articles and your independent research, respond to the following:
How is consumer debt different today than in the past?
What role do interest rates play in c?
What are the typical interest rates applied to credit cards, mortgages, and other debt?
Many of today’s interest rates are variable rather than fixed. What difference does this make to pension plans, housing loans, and other personal finances?
Write your response in 1–2 paragraphs (a total of 200-300 words).
Comment on your peers’ responses, addressing the following:
Have the issue of consumer debt and the role of interest rates been explored?
Does the response clearly explain the causal relationship between fixed interest rates and pension plans, housing loans, and other personal finances?
Are statements supported by reason and research?
RUBRIC |
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Excellent Quality 95-100%
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Introduction
45-41 points The background and significance of the problem and a clear statement of the research purpose is provided. The search history is mentioned. |
Literature Support 91-84 points The background and significance of the problem and a clear statement of the research purpose is provided. The search history is mentioned. |
Methodology 58-53 points Content is well-organized with headings for each slide and bulleted lists to group related material as needed. Use of font, color, graphics, effects, etc. to enhance readability and presentation content is excellent. Length requirements of 10 slides/pages or less is met. |
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Average Score 50-85% |
40-38 points More depth/detail for the background and significance is needed, or the research detail is not clear. No search history information is provided. |
83-76 points Review of relevant theoretical literature is evident, but there is little integration of studies into concepts related to problem. Review is partially focused and organized. Supporting and opposing research are included. Summary of information presented is included. Conclusion may not contain a biblical integration. |
52-49 points Content is somewhat organized, but no structure is apparent. The use of font, color, graphics, effects, etc. is occasionally detracting to the presentation content. Length requirements may not be met. |
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Poor Quality 0-45% |
37-1 points The background and/or significance are missing. No search history information is provided. |
75-1 points Review of relevant theoretical literature is evident, but there is no integration of studies into concepts related to problem. Review is partially focused and organized. Supporting and opposing research are not included in the summary of information presented. Conclusion does not contain a biblical integration. |
48-1 points There is no clear or logical organizational structure. No logical sequence is apparent. The use of font, color, graphics, effects etc. is often detracting to the presentation content. Length requirements may not be met |
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Discussion On Interest Rates Mounting Consumer Debt |
Discussion On Interest Rates Mounting Consumer Debt