Interest-ing Math

Middle School and High School Teacher

Students will learn about simple interest and how to calculate the real cost of a loan, credit card, and other types of borrowing.

Grade Level: 7 - 8th

Subject: Math

Length of Time: 40 - 50 Minutes

Common Core Alignment

CCSS.Math.Content.7.RP.A.3 - Use proportional relationships to solve multistep ratio and percent problems. Examples: simple interest, tax, markups and markdowns, gratuities and commissions, fees, percent increase and decrease, percent error.

Objectives & Outcomes

The students will be able to use the formula for simple interest, finding the total cost of using various types of loans or credit.

Materials Needed

  • Paper credit cards
  • pictures or photos of popular cars/motorcycles with prices (each with different interest rates and terms)
  • calculators (optional),
  • paper
  • pencil


Opening to Lesson

  • Choose several students and give them the choice of taking $1000 today or waiting one month and taking the money with ten or fifteen percent added to it.
  • Ask each of them for their reasons to take it now or wait for the month to pass.
  • Introduce the concept of percentage rates and the cost of borrowing money

Body of Lesson


  • Display the formula I = prt
  • “Plug in” the numbers for a new car purchase
  • Show an example of purchasing a new car for cash versus paying for it over time
  • Explain how the length of the loan affects the total amount the car will end up costing

Guided Practice

  • Distribute “credit cards” and a “cars” to each student
  • The students will choose a credit card and car with the terms they feel would be best for them
  • Once they determine the interest, cost of the loan, monthly payments, etc.; allow students to discuss their choices with others
  • Ask them if they would change their original choice based on discovering what others are paying
  • Discuss the reasons for lower vs. higher interest rates
  • Have students list or discuss advantages/disadvantages of taking a longer period of time to pay, paying over time versus paying in cash, etc.

Independent Practice

  • The teacher will distribute a handout with several similar word problems which will test the students’ skills in determining interest, total cost, monthly payments, etc.
  • For homework, “give” students a credit card to use allowing them to make an imaginary purchase costing over $300.  In essay form, have them explain to another person, who knows nothing about interest, the concept of paying interest on the purchase.
  • The teacher will collect the completed page(s).  This will be used as an assessment.


Ask students if they were surprised by the cost of purchases with interest added.  Prompt students to discover a method to earn interest such as bank accounts, retirement accounts, etc.  Finally, restate the original question about taking $1000 today or waiting for a month from now with ten or fifteen percent added.

Sponsored Content

Assessment & Evaluation

Handouts/Worksheets with word problems having similar questions related to calculating monthly payments, total cost of loans, etc.

Modification & Differentiation

Students may work in pairs.  Discuss reasons for different interest rates.  Pros and cons of buying new vs. buying a used product.  Do not use calculators.

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