498 - Why You Need to Understand Interest Rates

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By Gregg Clunis. Discovered by Player FM and our community — copyright is owned by the publisher, not Player FM, and audio is streamed directly from their servers. Hit the Subscribe button to track updates in Player FM, or paste the feed URL into other podcast apps.

In this episode, we look at the APR on our credit cards and loans.

Quotes:

"More than 40% of Gen Z, around 30% of Millennials and Gen X, and almost 40% of Baby Boomers say they don’t know what the interest rate on their credit card is, according to a new survey by Stash, a micro-investing and banking app.

But it’s not like folks don’t need to know because they’re paying off their bill in full each month and not triggering any interest charges: Americans paid $113 billion in credit card interest last year, up 12% from 2017, and up a whopping 49% from five years ago when the national average was just $76.3 billion, according to MagnifyMoney, a financial product comparison website."

Takeaways:

1. A higher APR or Annual Percentage Rate leads to paying more overtime. This seems basic but is often underestimated.

2. If you aren't extremely careful, you can get into a situation where you are never able to get out of the debt (student loans).

3. Higher APR means less gets paid on the principle which means carrying a higher balance for longer and lowering your credit score.

Here's what to do:

  1. Find your APR for every line of credit
  2. Create a plan to repay those debts. Either based on APR or on balance (avalanche or snowball)

Resources:

https://money.com/millennials-love-to-pay-with-credit-cards-but-almost-30-of-them-cant-name-their-interest-rate/

--- This episode is sponsored by · Anchor: The easiest way to make a podcast. https://anchor.fm/app

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