What Is Interest?
- September 19, 2017
- by Saundra Davis
The good, the bad, and the confusing! Interest can be your best friend (if you are earning it) or your worst enemy (if you are paying it). Interest is “the cost of money” you pay when you borrow (debt), or you earn when you lend (deposit money in a bank) money.
Of course, our deposits don’t earn nearly what we PAY in interest when we use credit or take out a loan, which is how financial institutions make money. They borrow from us (our deposits) and loan it to others (who pay interest on the loan).