How to Figure Out Interest Rates

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Interest rates vary depending on if they are simple interest rates or compound interest rates. Find out how interest rates work for investors with advice from a registered financial consultant in this free video on money management.

Part of the Video Series: Personal Finance Tips
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Video Transcript

This is financial adviser Patrick Munro talking about how to figure out interest rates. Interest rates vary depending on if they're simple interest rates or compound interest rates. If you're a borrower always remember to pay a simple interest rate. If you're an investor make sure you're paying compound interest rate where your investment makes interest and that interest also makes interest. Compound interest is referred to as the eighth wonder of the world because if left alone and you don't take principle out, your money grows. In fact it doubles every seven years under the rule of seventy two. Interest rates are critical to the economy and if you have good credit and you want to make sure that your rates are low and if you improve your credit, the interest rates will continue even lower resulting in better management for your money. However if you're an investor and you're putting money in to certificates of deposit at the bank or what not, you want to always drive for the highest interest possible. That's the difference in interest rates and how to calculate them. This is financial adviser Patrick Munro.

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