What do interest rates actually look like in our everyday lives? 👓

Let’s say you have a good friend named Jason.

Jason is in his 20’s and has some debt, investments, and a savings account 💁

Jason’s credit card has a balance of $500 with a 25% APR.

He can only pay $100 each month.

It will take 6 (not 5) months to pay off, and he’ll have paid $38.61 in just interest 💳

You can calculate this using this formula:

Monthly Interest Rate = APR ➗ 12

Monthly Interest Payment = Balance (at the end of a month) x Monthly Interest Rate

Jason has a car loan for $23,000 with a 6% APR over 72 months.

Once his car is paid off, he will have paid over $4,000 in interest, meaning he actually paid over $27,000 for his car! 😯

This one is much harder to calculate on your own, but there are plenty of Auto Loan calculators available online! 🚗

Jason also has a High-Yield Savings Account, which has a 4.69% APR and $10,000 in it.

So in one year, he’ll have earned $469 in just interest! 🤑

Jason’s stories are just some examples of how interest rates come into play in our day-to-day lives.

Next, we’ll give you some tips for navigating interest rates! 📈