Everyone above the age of 10 has heard of interest, but most of us do not take enough interest in interest despite the huge way this simple concept affects our everyday lives.
Anyone who has opened a credit card, taken out a loan, or opened a checking/savings account has been impacted by interest. The question is, do you know how interest works and how to use it to your advantage for Money Saved?
If not, you’re in luck, because that’s what we do at Money Saved is Money Earned! We save you money! We’re just like you, and we want to teach you how to save BIG interest on everyday expenses. We learned these tips through our expertise as well as life experience, and now we’re passing them on to you!
Read on for links to different kinds of loans and how to save big interest.
The concept of interest is simple. You wish to purchase something but don’t have the necessary funds, so you establish an agreement with a bank, credit card, or some other lender. You get the money then must pay the loan back over a period of time. The extra compensation, the interest you pay, makes the loan worthwhile for the lender. You (the borrower) make a payment every month with interest until the loan is paid off.
Simple right? Not so fast.
This is the point where most people forget about interest, when the loan is acquired and their monthly payment is established. If you just want to make your monthly payments and forget about it, feel free to stop reading. However, if you like Money Earned through Money Saved, keep reading for a more in-depth view of interest (and for how you can save major moolah!).
Many things determine your specific interest rate on various types of loans. Your credit score (and the elements that make up that score) is the biggest factor lenders consider when establishing interest rates for personal loans, credit cards, and mortgages (click here to better understand what goes into your credit score). This is why it’s so important to utilize credit responsibly, as it really effects your ability to gain new credit as well as your interest rates. Whatever your specific interest rate, it’s important to understand how lenders calculate interest and what percentage of your payments go to interest.
This is very important, and something many people do not understand!
Let’s take a look at a few different kinds of loans and discover how interest can affect the money you pay. Understanding how interest is calculated, as well as how you can cut down on the amount of interest you pay, is a huge step in having Money Earned through Money Saved.
Teaser: On the other hand, interest can also make you big money through investments (jump ahead to checking/savings accounts and investments to see how).
Click on the links below to explore different loans and the impact of interest.
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