MEPX
Chapter 6 of 10All chapters
  1. 1Choosing under scarcity
  2. 2How prices behave
  3. 3Inflation and real terms
  4. 4Shopping decisions
  5. 5Income and tax
  6. 6Borrowing
  7. 7Saving and compounding
  8. 8Housing costs
  9. 9Work and wages
  10. 10Making better decisions

Chapter 6 of 10

Borrowing

The cost of using money now.

Interest and APR

APR bundles the interest rate, compounding and most compulsory fees into one annual figure so offers can be compared. A low monthly payment often hides a long expensive term.

  • Interest free periods usually end with backdated charges if unpaid.
  • Overdrafts and short term credit can carry rates far above card rates.

Good and bad debt

Borrowing for something that lasts or raises income differs from borrowing for consumption. The question is whether the value outlives the repayments.