ECONOMICS
COMPOUND INTEREST
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Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
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True
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False
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Either A or B
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None of the above
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Detailed explanation-1: -Perma Debt-The process of revolving a permanent balance on credit cards and, in the process, paying much more for goods and services due to compounding interest on the outstanding balance. Principal-The amount of money originally borrowed or currently owed on a loan, excluding interest.
Detailed explanation-2: -Short-Term Financial Goals: Compound interest builds rapidly over time, making it harder to get out of debt. Paying off debt can make it easier to start saving and working towards your other financial goals.
Detailed explanation-3: -This process of earning interest on your savings plus earning interest on all of the accumulated interest from previous periods is called compounding. Investors can use the concept of compounding interest to build up their savings and create wealth.
Detailed explanation-4: -On the positive side, compound interest makes the return on investments (e.g. savings, retirement accounts) grow quicker and more substantially over time. On the negative side, it makes debt (e.g. credit cards) grow quicker and more substantially over time.