Hi. Welcome to Redeem the Commute. I’m Ryan, your host for the Money Course.

One jargon term we introduced yesterday was APR – Annual Percentage Rate.

It’s a way to combine together all the ways a loan, like a credit card, charges you interest over a year.

Officially: The overall cost of borrowing if you owe money on your credit card, loan or overdraft.

Watch this video to learn more about APR: https://www.youtube.com/watch?v=emlFFmvvqHM

Let’s say I want to buy a $499 laptop on credit.

How long it would take to pay off my $499 credit debt if:

This website helps us work it out – http://www.whatsthecost.com/creditCard.aspx?country=us

They also have a newer version of this handy calculator: https://www.moneysavingpro.com/credit-cards/payoff-estimator/

It’ll take you 169 months (that’s over 14 years) to pay back $499 if you only pay the required minimum of 2.25%.

You paid more than double the actual cost of the computer, because of the interest.

If you could afford to pay an extra $10 a month towards your credit card debt, it would mean you’d repay it in 38 months (just over 3 years versus 14 years!) and you’d save yourself $476.99 in interest.

In fact, if you could afford an extra $25 a month, you’d repay it in 18 months and save $549.70

Questions: Put a realistic debt you’ve considered into this calculator. How does this change your thinking?