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Photo By: Mike9Alive

“Interest rate” is one of those terms I think I understand, but I don’t fully ‘get’ how it works. Pete is back today with some great answers to my questions about interest rates. He explains what an interest rate is, where we find them, how they’re determined and why credit cards have different rates.

Very briefly, please explain what an interest rate is.

An interest rate is the rate at which borrowed money has to be repaid. It is typically expressed as a percentage. A rate of 1% implies that if you borrow $100, you have to eventually pay $101 back the person or institution you borrowed the money from.

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