You may have heard of interest rates before, but have you ever wondered why they’re so important? ❓

💡Interest rate = the % fee for borrowing money💰

💡Principal = the amount you’re borrowing 🧑‍🏫

Let’s say you took out a $1,000 loan that had 10% interest per year.

If you pay it in one year, you’ll pay $1,100.

This is $1,000 plus 10% of interest which equals $1,100 🤓

Interest rates encourage lenders to offer loans. 🤯

Without interest rates, people have no incentive to lend others money 😔.

But if you need to borrow money, you’ll want a low-interest rate, since no one likes paying fees. 🥳

But if you lend people money, you might want it to have a higher interest rate.

Then you’ll make more money off of your loan! 👀

Interest rates are the backbone of our economy since a lot of people, businesses, and governments need to borrow money. 🎒

In your daily life, interest rates will apply to car loans, mortgages, and the stock market. 🏦