What is interest?
Interest is an incredibly powerful concept and can work t your benefit or detriment. If you have money and are saving money, a bank may pay you interest on your money in exchange for letting the bank hold on to it for you. On the other hand, if you need to borrow money or use a credit card, a bank will charge you interest to do so.
What does compound interest mean?
Compound interest is a powerful economic force in which your money gain interest, and then more interest on the interest. So, you start making money on money that was paid to you on your initial deposit.
What does the PRIME rate mean?
Prime Rate is an interest rate used by banks. Generally, only individuals or businesses with the highest credit rating will receive a Prime Rate. Some variable interest rates are sometimes expressed as Prime plus or minus a certain percentage.
Actions You Can Take
- Open and keep an account at a bank or credit union that meets your needs.
- Track your savings and investments, and monitor what you own
- Plan for short-term and long-term goals
- Consult with a qualified professional on investments and other key financial matters
Hints and Tips
- People who keep track of their savings often end up saving more, because they have it on their minds. New phone apps are available to help people pass up purchases they don’t really need – you might want to try one!
- If you are making investments, it’s good to consult with a qualified professional about your plans. Before you purchase investments, be sure to build an emergency savings fund to cover your needs for at least three months. Keep the savings in an insured bank or credit union account that you can access if you need it.
- Many professionals call themselves “financial planners.” Before you hire one, ask for a description of the services offered. A good place to check the credentials of an investment advisor is your State’s consumer protection office, the State’s Attorney General’s office, or the issuing agency for any professional licenses or certifications.