An interest in credit cards is not the same as interest!

You might think you know what’s important about a credit card – like, you really gotta get one as soon as you can – but research suggests that teens are not 100% clued up on plastic money. Investing firm Charles Schwab conducted a survey in 2007 that showed that only 45% of teens know how to use a credit card and just 26% understood credit card interest and fees. Here’s the basics… A credit card allows you to buy things even if you don’t have the cash at the time. What this means is that you have to pay off what you have bought in monthly installments. For example, if I buy a pair of sneakers for R1200, I might have to pay a monthly installment of R200 for the next six months. However, this is not all you pay as the bank will charge interest and a fee to manage your credit. Interest is a percentage that is added to what you already owe and is set by the bank. So, if the interest rate is set at 12%, you will have to pay an extra 12% of the money you have used on a monthly basis.