What You Should Know About Interest Rates

Title:
What You Should Know About Interest Rates
Word Count:
495

Summary:
For all people shop around for the best rate, there are few who have taken the time to sit dow

Keywords:
interest rates

Article Body:
For all people shop around for the best rate, there are few who have taken the time to sit dow
Interest Rates are Compound.

It is important to remember that what you owe is compounded - that means you pay interest on t
A Thought Experiment.

Here’s a question: would you rather have $1 million, or $10,000 in a savings account earning 2

Well, let’s see how that $10,000 would grow. After 10 years: $61,917. 20 years: $383,375. 30 y

So after fifty years, you’d have over $500 million?! Well, not so fast. Of course, you have to
That’s the power of compound interest, and the way the credit card companies make their money
Compound Interest Adds Up.

Let’s work through an example on a more real kind of scale. Let’s say you have an average unpa

You will owe $150 in interest for the first year you borrow. However, this amount is then adde

After just five years at 15%, you’d owe double what you borrowed. And after 10 years, you’d ow
One Percent of Difference.

One more thing. You might think there’s not that much difference between a card that charges 1

At 12%: $1120, $1254.40, $1404.93, $1573.52 $1762.34 after five years. So you’ve saved $249.01

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