1. Interest

2. What is interest? • The amount of money the borrow must pay for the use of someone else’s money • Payment people receive when they lend money, allowing someone to use their money • Often referred to as APR, or Annual Percentage Rate

3. What is an interest rate? • A rate which is charge or paid for the use of money • The rates can change due to inflation or Federal Reserve policies • If rates go up, people can earn more money if they have an interest earning account • If rates go up, people may have to pay more back if they have a loan

4. Types of Interest • Fixed rate- the rate is unchanging and guarantees the same percentage of interest • Variable rate- the rate can go up and down and is usually determined by economic decisions

5. Low Interest High Interest • Savings Accounts • CD’s (Certificate of Deposits) • Low risk accounts • Money Market Accounts • Bonds • Stocks • High risk accounts

6. Calculating Interest • See Notes for examples