Imagine you’re buying a house, and borrowing $200,000 to do it. What is the total cost of the loan? Well 6% of $200,000 is $12,000. But that’s just for the first year. Under a standard payment plan, you’ll end up paying $231,676 in interest – 116% of the original loan amount.

Let’s look at student loans next: The standard interest rate for a PLUS Loan is 8.5% APR. If you borrow $40,000 for college and are on a 20-year repayment plan, you’ll end up paying $43,311 in interest – 108% of the original loan amount.

Do you carry a balance on your credit card? Among American households with credit card debt, the average amount is about $11,000. At a typical 18% APR, if you start paying down your balance with $300 per month, it will take about 4 years, and you’ll pay $5,090 in interest – 46% of the original loan amount.

One more example: two-week “payday” loans usually cost about $15 for every $100 borrowed. So if you get a payday loan for $400, you’ll pay $60 in interest – 15% of the original loan amount.

See the pattern here? Long-term loans generally have lower annual interest rates. But over a few decades, even a low rate can really add up. The best strategy is to pay cash when you can, and only borrow when you need to. And if you have a little spare money at the end of the month, use it to get ahead on your bills and you’ll save big in the long run.

This chart compares the total costs of these different loan types:

Visitors to www.themint.org, a financial website for kids asked, “If you spotted a great item at the mall that you couldn’t afford right now, what would you do?”   Nearly half (49%) said they would save each month until they had the full amount to buy it.  Nearly one third (31%) said, “Forget it.”  Only 8% said they would charge the purchase to a credit card.

These kids’ responses seem to be at odds with the behavior of their parents.  After all, we are only now emerging from a period when personal savings rates were at record lows, even dropping below zero at one point in 2005.

The generation of Americans that grew up during the Great Depression of the 1930s was well known for being frugal.  Even decades after the Depression ended, they remained skeptical of banks and often preferred paying in cash, not credit. It will be good news if our current generation of children learn to forgo unnecessary debt, and surveys like the one above suggest that they will.

But while being frugal is one thing, being afraid to use credit is something else entirely. Responsible use of credit will be important to future wealth. So for the next generation our hope is that there would be an appropriate balance between using credit responsibly and not getting over their head with debt.