Interest

In by Kristia van Heerden

Interest is how much it costs to borrow money. You can either earn interest when you lend money to somebody else or pay interest when you borrow money. Interest is the reason why debt is expensive. In addition the money you borrowed, you have to pay back an additional fee in exchange for using money that you didn’t have.

These posts discuss this in more detail:

Wealthy Maths: Nominal vs effective interest

Wealthy Maths: How to calculate real returns

Debt: Why debt costs money

Debt: Your DIY repayment plan

Podcast: The jargon buster episode