- 13 September 2023
- Posted by: Federica Montella
- Category: Investing
Table of Contents
What exactly are interest rates?
They’re the cost of borrowing money, usually expressed as a percentage.
Think of it as the price you pay for using someone else’s money.
There are two main types: Fixed and Variable.
Fixed rates stay the same throughout your loan term, while variable rates can change with the market.
Now, let’s talk about how these rates impact your purchases!
Imagine you’re buying a car.
If you finance with a high interest rate, you’ll end up paying a lot more in the long run.
But with a low interest rate, you’ll save big!
Take mortgages, for example.
A lower interest rate can mean lower monthly payments and more affordable homeownership.
On the flip side, high credit card interest rates can lead to substantial debt if you’re not careful.
So, understanding interest rates can help you make smarter financial choices, saving you money in the long run!
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