About simple interest
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Simple interest

The history of interest goes way back in time and was under public scrutiny for years and years. Lenders tried for years to get around the laws of not being able to charge interest. Simply put interest rates are considered the price of credit that is offered. In the medieval era it was considered forbidden to charge interest on any type of loan. However with the convenience of loans or lines of credit people starting finding other ways to give a credit card consolidation loan and profit from it. The lenders would charge their interests by accepting labor, food and other types of favors. This was how the interest world worked for many, many years until government official realized that many lenders just were not interested anymore. It became obvious that the loan process was not only important for the people but the corporation world as well. The plan was devised and a bill was passed due to supply and demand of opportunity cost that money was now seen as merchandise. Economically these interests rates became the cost of capital and at first became a way for income for all parties involved. To date there is all different types of interest rates and many different ways to pay them off.

Of course no interest is the best type of interest, but not readily available. If one happens to receive no interest it is not long before the lender figures out a way to apply the interest. The best type of interest besides no interest would be simple interest. Simple interest is charged only to the principal amount of the loan or the unpaid balance of the loan. With simple interest there is no value time of money that is factored in. Simple interest rates are not rolled over in a way of an ongoing charge therefore making this interest a more realistic way off paying off the balances. Having this type of interest is the best way to receive a loan or credit card. It is not widely offered, but if asked one may be able to receive this type of interest rate.

about simple interest and compound

About simple interest and compound interest

Compound interest is basically what most borrowers will receive when borrowing money or receiving some type of credit. Supply and demand will get the best of us every time because we don’t have too many choices. Compound interest is an interest that is charged on an ongoing basis. It is charged daily and will keep being charged until the balances are paid off. It is very hard to pay off this type of interest without being in debt for many years. Borrowers will accept almost any type of interest in order to receive a loan or line of credit. Lenders know this and have no problem taking advantage of it, but we allow this in order to receive the loans. We are all in a catch 22 situation when it comes to interest rates and how we receive them. The reality is that we need these types of credit to survive but are indebted to the lenders for the better part of our lives.

 

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