Wow!  Great Financing Options!  Buy a new TV for only $20 a month.

The Cost of using a Credit Card!

by Ruth M. Naugle

    Stores offer enticing financing options.  The hungry consumer searches for ways to obtain their hearts desire!  This has lead many companies to use credit opportunities to attract new customers.  The buy now, pay later philosophy allows the consumer to get the desired item while paying very little up front.  Sounds too good to be true?  Let's look a little closer at using a credit card to purchase a TV.  If one purchases a $1000 TV with a credit card and makes the minimum payment of $20.00 a month, then how long will it take to pay off the credit card.  Assume no purchases are made and the financing is consistent at 22% using the previous balance method.

Click to see spreadsheet.

The $1000.00 TV is paid off is 137 months or 10 years and 5 months.  The total cost of the TV is $2735.61.  That is $1735.61 in interest on a TV that initially cost $1,000.00.

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