Most people don’t know about all of the different interest rates that exist, but it is very important to learn about this before getting a loan. It can help you make the right decision to save as much money as possible in the future. The interest rate that you get on your loans and credit cards will have a huge impact on your ability to repay your debt. This is just one of the reasons why you need to understand these things.
Simple Interest
First we will take a look at simple interest or nominal interest. This type of interest rate is based on the original amount of the loan you get. It is very straightforward and not complicated in the slightest. For example, if you borrow £1,000 at a 10% interest rate, you will have to pay back £1,100 (not including any other fees).