---
title: "The Real Cost of Buying Now and Paying Later"
description: "Credit turns one price into a stream of payments plus interest. Work out the total repaid rather than the monthly figure, and see what paying only the minimum does to a balance over a year."
canonical: https://lightmysky.com/learn/life-skills/the-real-cost-of-buying-now-and-paying-later-mt_VidrDsqJqA
source: https://lightmysky.com/learn/life-skills/the-real-cost-of-buying-now-and-paying-later-mt_VidrDsqJqA.md
retrieved: 2026-09-12
---

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# The Real Cost of Buying Now and Paying Later

Credit turns one price into a stream of payments plus interest. Work out the total repaid rather than the monthly figure, and see what paying only the minimum does to a balance over a year.

Subject: Life Skills · Area: Money & Finance · Ages 15 to 16
Page: https://lightmysky.com/learn/life-skills/the-real-cost-of-buying-now-and-paying-later-mt_VidrDsqJqA

## Ready when they can

- Work out the total repaid under a credit offer and compare it against the cash price
- Explain what an annual interest rate means for a balance that is not cleared each month
- Show what happens to a balance when only the minimum payment is made each month

## Lesson: Count the full price of credit

Credit turns one price into a stream of payments plus interest. The monthly figure tells you what leaves your pocket now. The total tells you what the item really costs, so always multiply the monthly amount by the number of months.

**Example.** A 25 a month deal over 18 months costs 450 in total, while the same item at 400 cash saves 50. When a shop offers deposit plus monthlies, add the deposit to every payment and hold that total next to the cash price.

An annual interest rate is the yearly charge on money you still owe. Near 20 percent, an unpaid 500 balance grows by about 100 across a year even if you buy nothing new. Paying in full each month avoids that charge entirely.

**Tip.** Paying only the minimum covers mostly interest, so the balance barely shrinks and the debt drags on for years. Paying more than the minimum, even a little more, cuts both the total repaid and the time in debt.

**Recap.** Judge every offer by its total repaid, watch the rate on unpaid balances, and pay above the minimum.

## Practice

8 questions on this page, each with its working shown.

## Needs first

- [Borrowing & Debt](https://lightmysky.com/learn/life-skills/borrowing-and-debt-mt_bAy4dmP1-A)
- [Subscriptions and the Default to Renew](https://lightmysky.com/learn/life-skills/subscriptions-and-the-default-to-renew-mt_jvVqDwwHIj)

## Opens up

- [Credit Files and What Lenders See](https://lightmysky.com/learn/life-skills/credit-files-and-what-lenders-see-mt_SfwNy9cOjb)