A Brief Guide To Interest Rates

By: Admin / Textr Online

Excuse us for the generalization; most currencies of the modern world are now in decimals. Currencies, just like numbers, work in different units.
 
Let us elaborate:
 
$1 has 100 cents.
 
£1 has 100 pence.
 
€1 has 100 cents. 
 
Doing basic calculations can be easy for the most part, but some instances can get tricky. For example: managing your finances. This is an essential part of any person’s life since it ultimately decides how to live within our budget. With that said, even thought he sound of living debt-free can be music to your ears, it’s not a smart approach.
 
Sounds baffling, right?
 
Allow us to elaborate. 

 

 Debt Isn't Always Bad

 

Unless you’re swimming in a pool of Benjamin Franklins, it can be unrealistic to imagine that you’ll spend your whole life without owing someone or an institution any money. It could be debt for a house you’re trying to buy, your dream car, or your education – the 21st century relies heavily on debt.
 
People who do have the greens to pay for expensive items in cash also have relatively low credit scores. Because of this, they have to face several difficulties; for example: purchasing a phone plan for these people can be hard since they have a below-average credit score. 

 Understanding Bad Interest

 

Any high-interest rate is referred to as bad interest. This usually happens when the person in debt purchases an item with little value but can accumulate a lot of interest. These purchases are never necessary, but we somehow still manage to consider them an important part of our lives.
 
Are you thinking of an example?
 
Credit cards!
You pay a lot more than you have to for everything you buy just because of a credit card. Another example is a cash advance loan. Since they require low credit and give you cash instantly, falling into this trap is easy. But when it’s all said and done, you end up paying three times what you originally borrowed.  

Understanding Good Interest

 

No matter what you are interested in buying, think about it for a second. Will there be a better version for it next year? If so, you should save up money and buy later. When you break your piggy bank of retirement funds to buy an expensive treat for yourself, you feel guilty and won’t enjoy your new purchase. So, it’s better to wait until you have cash in hand to buy what you want. 
  

 

Wrapping Up

Even though we conveniently label credit as bad or good, the power is always in your hand. Regular payments won’t impact your credit score adversely, but if you’re late on your mortgage payments, even good debt can turn into bad debt.  

 

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