In this lesson, we're going to
be talking about finance. And
one of the most important aspects
of finance is interest.
When I go to a bank or some
other lending institution
to borrow money, the bank is happy
to give me that money. But then I'm
going to be paying the bank for the
privilege of using their money. And that
amount of money that I pay the bank is
called interest. Likewise, if I put money
in a savings account or I purchase a
certificate of deposit, the bank just
doesn't put my money in a little box
and leave it there until later. They take
my money and lend it to someone
else. So they are using my money.
The bank has to pay me for the privilege
of using my money.
Now what makes banks
profitable is the rate
that they charge people to use the bank's
money is higher than the rate that they
pay people like me to use my money. The
amount of interest that a person pays or
earns is dependent on three things. It's
dependent on how much money is involved.
It's dependent upon the rate of interest
being paid or the rate of interest being
charged. And it's also dependent upon
how much time is involved. If I have
a loan and I want to decrease the amount
of interest that I'm going to pay, then
I'm either going to have to decrease how
much money I borrow, I'm going to have
to borrow the money over a shorter period
of time, or I'm going to have to find a
lending institution that charges a lower
interest rate. On the other hand, if I
want to earn more interest on my
investment, I'm going to have to invest
more money, leave the money in the
account for a longer period of time, or
find an institution that will pay
me a higher interest rate.
In this lesson, we're going to
be talking about finance. And
one of the most important aspects
of finance is interest.
When I go to a bank or some
other lending institution
to borrow money, the bank is happy
to give me that money. But then I'm
going to be paying the bank for the
privilege of using their money. And that
amount of money that I pay the bank is
called interest. Likewise, if I put money
in a savings account or I purchase a
certificate of deposit, the bank just
doesn't put my money in a little box
and leave it there until later. They take
my money and lend it to someone
else. So they are using my money.
The bank has to pay me for the privilege
of using my money.
Now what makes banks
profitable is the rate
that they charge people to use the bank's
money is higher than the rate that they
pay people like me to use my money. The
amount of interest that a person pays or
earns is dependent on three things. It's
dependent on how much money is involved.
It's dependent upon the rate of interest
being paid or the rate of interest being
charged. And it's also dependent upon
how much time is involved. If I have
a loan and I want to decrease the amount
of interest that I'm going to pay, then
I'm either going to have to decrease how
much money I borrow, I'm going to have
to borrow the money over a shorter period
of time, or I'm going to have to find a
lending institution that charges a lower
interest rate. On the other hand, if I
want to earn more interest on my
investment, I'm going to have to invest
more money, leave the money in the
account for a longer period of time, or
find an institution that will pay
me a higher interest rate.
In this lesson, we're going to
be talking about finance. And
one of the most important aspects
of finance is interest.
When I go to a bank or some
other lending institution
to borrow money, the bank is happy
to give me that money. But then I'm
going to be paying the bank for the
privilege of using their money. And that
amount of money that I pay the bank is
called interest. Likewise, if I put money
in a savings account or I purchase a
certificate of deposit, the bank just
doesn't put my money in a little box
and leave it there until later. They take
my money and lend it to someone
else. So they are using my money.
The bank has to pay me for the privilege
of using my money.
Now what makes banks
profitable is the rate
that they charge people to use the bank's
money is higher than the rate that they
pay people like me to use my money. The
amount of interest that a person pays or
earns is dependent on three things. It's
dependent on how much money is involved.
It's dependent upon the rate of interest
being paid or the rate of interest being
charged. And it's also dependent upon
how much time is involved. If I have
a loan and I want to decrease the amount
of interest that I'm going to pay, then
I'm either going to have to decrease how
much money I borrow, I'm going to have
to borrow the money over a shorter period
of time, or I'm going to have to find a
lending institution that charges a lower
interest rate. On the other hand, if I
want to earn more interest on my
investment, I'm going to have to invest
more money, leave the money in the
account for a longer period of time, or
find an institution that will pay
me a higher interest rate.
In this lesson, we're going to
be talking about finance. And
one of the most important aspects
of finance is interest.
When I go to a bank or some
other lending institution
to borrow money, the bank is happy
to give me that money. But then I'm
going to be paying the bank for the
privilege of using their money. And that
amount of money that I pay the bank is
called interest. Likewise, if I put money
in a savings account or I purchase a
certificate of deposit, the bank just
doesn't put my money in a little box
and leave it there until later. They take
my money and lend it to someone
else. So they are using my money.
The bank has to pay me for the privilege
of using my money.
Now what makes banks
profitable is the rate
that they charge people to use the bank's
money is higher than the rate that they
pay people like me to use my money. The
amount of interest that a person pays or
earns is dependent on three things. It's
dependent on how much money is involved.
It's dependent upon the rate of interest
being paid or the rate of interest being
charged. And it's also dependent upon
how much time is involved. If I have
a loan and I want to decrease the amount
of interest that I'm going to pay, then
I'm either going to have to decrease how
much money I borrow, I'm going to have
to borrow the money over a shorter period
of time, or I'm going to have to find a
lending institution that charges a lower
interest rate. On the other hand, if I
want to earn more interest on my
investment, I'm going to have to invest
more money, leave the money in the
account for a longer period of time, or
find an institution that will pay
me a higher interest rate.