If you’re like me, it probably takes you a little while to grasp new financial concepts. For example, it took me forever to get a good understanding of how interest works when it comes to your loans or credit. You might not be surprised to know that explanations about the concept of interest rates are some of the financial queries that people tend to search about most online.
The trap that a lot of people fall into with interest is that they make only the minimum payments on their bills in order to stretch the full payment out as long as possible. What they don’t realize is that interest continues to accrue, so the longer you stretch out your payments, the more interest you’ll wind up paying. This is one of the quickest ways that people wind up gathering major debt.
There are all different kinds of interest, and it can get pretty complicated when you begin talking about compounding interest in particular, but this is the most basic idea.
What else do you think beginners should know about interest rates?