When searching for the word Interest (on that search site that you know very well 🙄) explanations appear such as rewards, rents, usuries, premiums, profits, prizes and income. In the dictionary, Interest is the plural of Juro. And I swear it's profit obtained from borrowed money or “lend money at interest”. Interest is usually accompanied by the word rate (interest rates).
ADVERTISING
What does it mean?
Interest is the “rent” of the amount borrowed. The term, financially speaking, is a percentage charged on top of the amount borrowed or the amount that one of the parties owes. In addition to being charged on top of the amount, it is also calculated based on the length of the loan.
“The interest rate is one of the main prices in the economy and is defined as the 'time value of money'. The interest rate defines the relationships between savers and consumers. This term is applied very frequently and defines temporal or intertemporal decisions”, explained economist José Mauro Dellela, professor in the Department of Administration at FAAP who was Chief Economist at Itaú Unibanco Asset Management.
Listen here to Professor Dellela's full explanation when Curto News:
ADVERTISING
Who is who?
Let's start with the debtor and creditor, or saver and consumer. The debtor (or consumer) is the one who borrows the amount and pays the interest on it.
The creditor (or saver) is the one who lends the amount and receives interest on the saved resource.
What are they for?
Interest is a type of bonus, which is paid by the debtor for having consumed, invested or paid other debts with the saver's money.
ADVERTISING
Important: Don't confuse interest or interest rate you pay for a loan, com the “basic interest rate of the economy”, like Selic. This is another story that we explain to you in another text. Coming soon 😉!
Curto Explain: everything you need to know and are embarrassed to ask!😉
Click to see more explanatory content ⤴️
