Confounding Compounding

A customer comes into the bank looking to pay off the starter credit card bill associated with his account. He gets confused when he sees the balance.

Customer: “I only spent $500 on this card. Why is my total bill more than that? Is my identity being stolen?”

Me: “That’s the interest.”

Customer: “What’s interest?”

Me: “Uh… interest is what you owe the bank for extending you credit over a period of time.”

Customer: “I don’t understand.”

I go back to basics and explain the concepts of credit cards, interest, percentages, all of it. This guy had no idea, as in none at all, how credit cards worked.

Customer: “Well, I never would have gotten a credit card if I knew I would be charged money for being given free money!”

Me: “Well… It’s not free money.”

Customer: *Annoyed.* “Yes! I know that now!”

He pauses and then looks worried.

Customer: “Wait… will this interest thing be on my car loan, too?”