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INTEREST What does that mean?. What interest would anyone have in lending you money?

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Presentation on theme: "INTEREST What does that mean?. What interest would anyone have in lending you money?"— Presentation transcript:

1 INTEREST What does that mean?

2 What interest would anyone have in lending you money?

3 What interest would a bank have in loaning money to people?

4 Business is business… they want your

5 Who else, besides a bank, charges you interest if you need to borrow money?

6 Ever hear of these guys? No credit check? Bad credit OK?

7 How about these guys?

8 Buying a car??? You’re paying interest unless you pay cash!

9 Credit card, anyone?

10 Why do cashiers always ask you if you would like to save 10% on your purchase by opening a charge account?

11 How about the no payment, no interest for one year, two years, or until the year 2012? Why would they do that? How could they possibly make money that way?

12 What will you really pay? You are going to buy a coat for $500. The interest rate is 20% annually. You receive a 10% discount for opening the credit account. You pay $20.00 per month. How many years will it take you to pay it off? How much will you pay for the $500. coat?

13 What you pay…Year 1 Coat price - $500.00 Less 10% - 50.00 Balance - 450.00 20% Int. - 90.00 (year 1) Balance - 540.00 Less 20/m - 240.00 Balance - 300.00

14 What you pay…Year 2 Balance - $300.00 20% Int. - 60.00 Balance - 360.00 Less 20/m - 240.00 Balance - 120.00

15 What you pay…Year 3 Balance - $120.00 20% Int.- 24.00 Balance- 144.00 You’ll pay it off!

16 What did you pay? Year 1 interest - $90.00 Year 2 interest - $60.00 Year 3 interest - $24.00 TOTAL INTEREST - $174.00 PRICE OF COAT - $450.00 TOTAL PAID - $624.00


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