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Financial Literacy

Financial Literacy

Paying for It All

The bank keeps a list of all your sweet buys throughout the month and then sends your mom the list (a statement) of how much you owe. Between your $80 budget and the things your mom charged, the card’s balance is back at its limit of $500. And it’s time to pay.

If your mom has all the money, great! …She can log-in to her online banking account and send the payment pronto. If she doesn’t have enough money, no problemo because credit cards let you carry a balance. This is the loan part of the deal. Revolving accounts like credit cards let you keep borrowing money up to your credit limit as long as you’re making the minimum payment. (Compared to installment loans where you pay a fixed amount for a fixed period of time.)

So your mom pays a portion of the bill and the rest is the balance on her credit card account. The bank charges her interest on that balance. This is the part the bank really likes, the reason that they offer credit cards---to make money. It’s what they are supposed to do. They are financial animals. It’s why the scorpion always stings the turtle as they are floating together across the river and dies – stinging things is just what scorpions were put on earth to do…

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