when does interest cost you? when does it benefit you?
Answers
Answer:
Interest cost is the cumulative amount of interest a borrower pays on a debt obligation over the life of the borrowing. Interest is paid on the debt in addition to repayment of principal.
High interest credit cards come to mind, and we dismiss interest as a bad thing. It's true that paying interest can be a problem. After all, you're giving money to someone else, and interest adds to your debt if you carry a balance. On the other hand, interest can be a good thing – if you're earning it.
Answer:
How much interest can you earn on $1,000? If you're able to put away a bigger chunk of money, you'll earn more interest. Save $1,000 for a year at 0.01% APY, and you'll end up with $1,000.10. If you put the same $1,000 in a high-yield savings account, you could earn about $5 after a year...
*3 kinds of people who benefit from higher interest rates
1. Savers seeking safetyThe least-risky types of accounts — bank savings, credit union savings, and money market, to name a few — offer better yields when interest rates rise.
2. Vacationers abroadWhen interest rates increase, the dollar’s value does too. So those vacationing abroad or buying foreign goods may get a boost in spending power by using dollars.
3. RetireesThose who depend on investment interest income for living expenses could see a little bit of relief if their interest rate rises and their investments increase in value.