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Interest

Interest. What is 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 an interest rate? .

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Interest

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  1. Interest

  2. What is 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

  3. What is an interest rate? • 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

  4. Types of Interest • 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

  5. Low Interest High Interest • Savings Accounts • CD’s (Certificate of Deposits) • Low risk accounts • Money Market Accounts • Bonds • Stocks • High risk accounts

  6. Calculating Interest • See Notes for examples

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