A good interest rate can make a big purchase a wise investment. Likewise, a bad interest rate can almost be predatory. It can set you up for failure if all of your ducks aren’t in a row. No need to worry, though. FitnessBank has gathered some quick tips when it comes to managing your interest rate. Follow these to save yourself from a bad financial situation.
One of the first steps to take regarding education on interest rates interest rates is knowing the difference between simple and compound.
A simple interest rate is, as its name implies, much easier to manage than a compound one. It’s more of a fixed percentage, meaning it only applies to the initial amount of money discharged. If it’s on an annual basis, then that amount of you owe each year is the same.
But, also as its name implies, a compound interest rate sees a gradual increase in your amount owed by the year. After a while, those numbers will begin to add up. The longer your keep a balance with compound interest rates, the more of an inescapable hole you may end up digging yourself into. That’s why it’s good to always practice good payment habits, i.e., paying ahead when you can. Go the extra mile now, so that you can reap more worthwhile benefits in the long run.
Knowing Whats Fair When it Comes to Your Rate
Meaning, not every entity or individual will get the same interest rates for the same circumstances. While this may seem unfair at the onset, there is a specific method to the noted approach.
It’s a based on an equation that works in a number of individual factors that vary from person to person. So the same loan being used for the same purpose will likely come with different terms for a person with a moderate credit history than for a company that has a well established one. The key is being accurate in your assessment of your current circumstances and having realistic expectations when it comes to applying.
We’ve barely scratched the surface with this education on interest rates. There are any number of combinations that can lead to your final figure being what it is. To get the best possible rates, keep your credit history and tip and top shape.
Have more questions? Need help in a specific area when it comes to your banking needs? Contact FitnessBank today. Our staff of trained experts will get you the support you need, and help keep your finances on track.