College students discuss their understanding of basic credit card terms - APR, Interest Rate, what happens if you miss a payment and how long it would take to pay off a purchase.
Credit card basics
What does “APR” stand for?
MAN 1: APR is\u2026
WOMAN 1: Um, uh, oh\u2026
WOMAN 2: U, something rate appreciative\u2026.um, I don’t know. [laughs]
MAN 2: APR is, uh, Annual Percentage Rate, so it’s the amount of uh, percentage of interest you pay per year.
What are interest rates?
MAN 1: Interest rates are the\u2026[laughs]
MAN 3: Uh, they’re, uh\u2026.[laughs]
WOMAN 2: It’s the percentage that you’re paying on top of the money that they’re loaning you.
MAN 1: It’s where they, I guess, they make their profits; how they make their money, by offering you that service.
What happens if you miss a payment?
MAN 1: I know, \u2018cause I’ve missed many payments.
MAN 2: If you miss a credit card payment, your rates will probably go up.
MAN 4: Uh, late fees, and if it goes too long, it will show up on your credit report.
How much will a pizza cost if you take 4 years to pay it off?
WOMAN 3: Er, probably like fifty bucks.
MAN 1: A lot more, uh, than what you originally paid for.
MAN 2: Let me work it out for a second.
MAN 1: It could take four years to pay off a pizza? Geez…
MAN 5: A lot more than it’s worth.
MAN 2: 227 dollars.
MAN 1: I mean maybe you shouldn’t be buying pizza with your credit card if it takes you four years to pay that off.
Take charge of your credit cards.
College students discuss their understanding of basic credit card terms – APR, Interest Rate, what happens if you miss a payment and how long it would take to pay off a purchase.