 |
MONEY
2020 TM
 |
When To Use Credit
After many years of watching your old black and white TV, you decide that you are going to buy a new 24" color television. You have spent months shopping around, and have picked out the make and model you want. The cost of the TV you want is $400. You have three payment options to choose from. Let's see how much that TV will really cost you.
- You could rent it with an option to buy it
- If you rented the TV, you would pay about $56/month for 78 weeks, making the total cost of the TV $1,092
- You could buy it on credit
- If you bought it on credit with an 18% interest rate and 18 months to pay it back, your monthly payments would be about $25.52 for a total cost of $459.36.
- You could save up for it
- If you saved $56/month (the same amount you would pay to rent it), you could pay cash for the TV in 31 weeks, which is less than 8 months. If you and your family can make yourselves live without the TV for 31 weeks and set aside $13/week, you can save as much as $692.
When shopping for the things you want, you need to look for the best buy. Some stores offer low cash prices but charge high credit interest rates. Where you buy depends on whether you are paying cash or using credit.
Before you buy on credit, ALWAYS ask yourself:
- Do I really need this item?
- Is there something else less expensive that would be just as good?
- Is this the best time to buy?
- Is there something else I want more?
- What other bills do I have to pay?
- Is this price reasonable?
- Have I compared credit rates to find the lowest costs?
Now that you have been armed with the knowledge to fight the credit war, let's see how much you have learned.....
