Compound interest and the rule of 72.
Getting tuition money to finish your education while staying clear of loans is literally money in the bank. When you acquire the loans the banks and loan companies are so eager to give you, as with any loan that is not a personal loan, you will pay interest if you are out of school or have graduated past six months. Ere is where things get very interesting. The interest can go as high as 29 percent, compound interest.
Let’s define compound interest and how it is used against you. This concept works for the loan companies and works very well for the banks If you are aware of this principle. you will be able to use it to your favor.
Compound interest and the rule of 72 work hand in hand. The rule of 72 will tell you how long it will take your money to double at a given interest. For example. Santander bank states they will give you 2 percent on a savings account. By the way, I would pay money to see interest like that given at any American bacnkk. Take the number72 and divided by the 2 percent. The result is 36. That means it will take 36 years for your money to double. You see, the higher the interest rate the interest they earn on the money you owe them grows. Do you see why this works so well for them?
Funny enough, the banks and other loan institutions will charge you compound interest. If you have some money on a savings or checking account you accrue simple interest.
What is simple interest?
Simple interest is the interest you accrue based on an initial amount deposited in a designated account. Let’s say you deposit 100.00 dollars in the same Santander checking account at 2 percent, those funds will grow only based on the initial 100.00 dollars. In compound interest the funds grow in the following manner.
Say you deposit 100,00 in a savings account at 2 percent interst, in one year those funds will have accrued a whopping two dollars. The following year, the 102.00 dollars will have accrued 2 percent. With compound interest the102.04 will have been accrued.
Question. Why don’t banks and lending institutions give the students compound interest on their savings accounts and simple interest on the funds the students owe?
I believe you can answer that question.
Question. How do I make the rule of 72 work for me? Where do I get compound interest on my money?
What’s your opinion?
I would love to know.
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