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Interest

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Page 1: The amount of money the borrow must pay for the use of someone else’s money Payment people receive when they lend money, allowing someone to use their

Interest

The amount of money the borrow must pay for the use of someone else’s money

Payment people receive when they lend money, allowing someone to use their money

Often referred to as APR, or Annual Percentage Rate

What is interest?

Page 3: The amount of money the borrow must pay for the use of someone else’s money Payment people receive when they lend money, allowing someone to use their

A rate which is charge or paid for the use of money

The rates can change due to inflation or Federal Reserve policies

If rates go up, people can earn more money if they have an interest earning account

If rates go up, people may have to pay more back if they have a loan

What is an interest rate?

Page 4: The amount of money the borrow must pay for the use of someone else’s money Payment people receive when they lend money, allowing someone to use their

Fixed rate- the rate is unchanging and guarantees the same percentage of interest

Variable rate- the rate can go up and down and is usually determined by economic decisions

Types of Interest

Page 5: The amount of money the borrow must pay for the use of someone else’s money Payment people receive when they lend money, allowing someone to use their

Low Interest High Interest Savings Accounts

CD’s (Certificate of Deposits)

Low risk accounts

Money Market Accounts

Bonds

Stocks

High risk accounts

Page 6: The amount of money the borrow must pay for the use of someone else’s money Payment people receive when they lend money, allowing someone to use their

See Notes for examples

Calculating Interest

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