The Power of Interest: Making Informed Financial Choices

Interest rates are a fundamental concept in finance, but what exactly is an interest rate? You might think of it simply as the percentage you earn each year on your bank or investment accounts or the percentage you pay in interest on your mortgage or car loan each year. And you’re right, an interest rate is the cost of borrowing money or a reward for saving money. Think of it as the price you pay to borrow money or the money you earn for keeping your money in a bank or in investments.

But interest rates can have many different interpretations, so let me try to break down interest rates in a way that is easy to understand.