Mastering Interest Rates

When we think of interest rates, we may begin to get anxious because the topic seems difficult to understand. But really, the concept is simple. Interest can be defined as rent on money. Paying interest when you borrow money for some period is similar to paying rent to use an apartment for some period. When you no longer need the money, you return it to the owner. You usually pay the interest plus a fraction of the principal each month for several months or years. While you pay interest if you borrow money, you can also earn interest if you loan money. In other words, you can be a borrower or a saver. In this module, students look at how interest rates affect us in our daily lives. Some guiding questions for this module are:

How do I calculate an interest rate? How does interest work on credit cards? How does interest work on savings accounts? How do rising and falling interest rates affect me?

Arkansas standards covered in this curriculum:

Arkansas economics standards were revised in 2017 to further incorporate personal financial literacy.

PF.7.SI.1 Compare the effects of interest rates as applied to saving and borrowing money
PF.7.SI.2 Examine how consumers are affected by raising and lowering interest rates
PF.7.SI.3 Calculate simple and compound interest and explain the difference between the two
PF.7.SI.4 Analyze the relationship between risk and return 

 Full PDF versions of all state social studies standards can be located on the Arkansas Department of Education website.

Curriculum Layout:

At the start of this curriculum, you will see a schedule to guide you through how to explore the included content with your students. Detailed lesson plans give teachers an overview of the materials and include additional images and graphs to assist teachers in providing visual aids. Also included are questions to explore during class discussion, and worksheets and activities to include to assess mastery. 

How to access:

Click the image below to preview a few pages from our newest curriculum module! Like what you see? Request a complete copy by filling out the short form below.

Mastering Interest Rates

Oops! We could not locate your form.

Other materials:

The following materials will provide instructors with additional information and activity suggestions to expand on topics presented in this unit. Some of these materials may require internet access. These materials were created by other organizations that work to create economic education content, and were included in this module for their connections to Arkansas standards.

Comparing Auto Loans (NGPF)

In this activity, students walk through a scenario of buying a vehicle, and the many factors at play along the way. Students learn how credit history, savings, and interest rates affect what car they are able to afford and what monthly payments they can negotiate.

Next Gen Personal Finance is a non-profit organization that works to partner with teachers by sharing timely and relevant curricular resources, providing effective professional development, and advocating to increase access to financial education.

What Interest Rates Are People Paying on Their Credit Cards (NGFP)

The interest rates on revolving lines of credit can be very high. This interactive shows what interest rate people have been paying on their credit cards between 2001 and 2013. It can also be used to see the number of cardholders who pay off their balance in a given month.

Next Gen Personal Finance is a non-profit organization that works to partner with teachers by sharing timely and relevant curricular resources, providing effective professional development, and advocating to increase access to financial education.

Simple & Compound Interest – Why it is Great to Save (St. Louis Fed)

This lesson plan looks at why it is hard to save and why it pays to save. Formulas for simple and compound interest, as well as the Rule of 71, are explained and used to illustrate the benefits of saving and how starting early leads to large growth over time.

This unit plan was developed from a partnership between the Minnesota Council on Economic Education and the Federal Reserve Bank of St. Louis. The Econ Ed team at the St. Louis Fed is dedicated to providing high-quality resources and professional development to improve instruction in pre-K through college classrooms.

Compound Interest Guide & Calculator (MoneyGeek.com)

This site has a fun graphing tool where students can adjust savings contributions and interest rates to watch how their investments could grow over time. There is also an included article and frequently asked questions section that teachers can use for a literacy alignment or to guide discussion during the unit.