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Published byKaya Tippetts Modified over 9 years ago
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INTEREST What does that mean?
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What interest would anyone have in lending you money?
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What interest would a bank have in loaning money to people?
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Business is business… they want your
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Who else, besides a bank, charges you interest if you need to borrow money?
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Ever hear of these guys? No credit check? Bad credit OK?
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How about these guys?
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Buying a car??? You’re paying interest unless you pay cash!
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Credit card, anyone?
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Why do cashiers always ask you if you would like to save 10% on your purchase by opening a charge account?
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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?
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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?
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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
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What you pay…Year 2 Balance - $300.00 20% Int. - 60.00 Balance - 360.00 Less 20/m - 240.00 Balance - 120.00
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What you pay…Year 3 Balance - $120.00 20% Int.- 24.00 Balance- 144.00 You’ll pay it off!
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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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