Interest Rates

Interest’s rates are a very important aspect of the economy. As a consumer when interest rates are low we tend to have interest in big purchases.   If the interest rates rise consumers are less likely to make any big purchases. Interest rates influence the purchasing power of most consumers.   For example, when buying a car, the lower the interest rate, the smaller your monthly payment will be.   The period of any investment or loan is important because it affects your pay out.   As stated in the power point slides, a $1 today is worth more than a $1 tomorrow. The length of time you have on an investment can either increase or decrease your funds. For example, if you were to make double payments on your mortgage loan, you will decrease your debt and decrease the amount of interest you have to pay on the principle. Being aware of your interest and length of investment or loan can help you save money. Interest rates contribute to how fast your investment or loan will expand.
It is important to educate yourself with the terms and conditions of your personal credit cards, because high interest rates will have you paying more than you borrowed. For example, if you have a credit card balance of 5000.00 and the interest rate is 20%, you will end up paying over $80.00 in interest per month. Having the knowledge of compounding interest will help me in the near future with accepting credit card offers.