Word of the Week:
Interest

Definition: Interest is the cost of borrowing money. For a borrower, interest is the cost of taking on a loan. For a lender, interest is the profit earned on lending money. It's usually expressed as a rate, such as 5%. There are two types of interest: simple (initial amount borrowed) and compound (borrowed amount plus any accrued interest) Example: if you borrow $1,000 at a 5% interest rate for one year, you would pay back $1,050.

Key Takeaway: If you're borrowing money, interest works against you. If you're lending money, interest works for you.

Challenge:  Compare interest rates from different banks and choose the one that is most appealing. With the feds raising interest rates, there are banks out there that have also raised their saving account interest rates.

Fun Fact: Although it's rare, interest rates can be negative where the bank pays you to take out a loan (or charging you to keep your money safe).