In this episode, we explore the mechanics of plastic money, starting with the critical distinction between standard credit cards and charge cards—instruments that typically require the balance to be paid in full every month. We trace the history of these payment methods, from Western Union’s 1914 paper identification cards to the 1950 launch of Diners Club, which introduced a card accepted at multiple merchants.

We also break down the complex world of interest rates, explaining why the Annual Percentage Rate (APR) often differs from the Effective Annual Rate (EAR) due to daily compounding. Listeners will learn about "stoozing," a strategy where consumers borrow at 0% interest to generate profit through high-interest savings accounts.

Finally, we discuss how financial institutions determine credit limits based on ability-to-pay regulat ...