Financial Education
The true cost of borrowing
The myth that low interest rate credit cards (or similar forms of credit) are better choices for consumers than installment loans because of lower interest rates is exactly that: a myth. In fact, the "term" of any loan affects the real cost of borrowing. It is interesting to note that almost anyone asked believes that a flat rate of $17 for a $300 loan is better for a family than a loan with an Annual Percentage Rate (APR) of 34.95%. The simple truth is, that for the term of 90 days, they are exactly the same.Lesson: When shopping around for any forms of credit, don't just compare rates. Compare terms, too. Make sure you understand the actual cost of the loan and make the comparison on that basis.
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