Insight on Compound Interest
What are some of the uses of compound interest?
Interest is the cost of borrowing and is affected by your trustworthiness, which is measured by your credit score, income and ability to pay back that debt. It can greatly affect the amount of interest you pay when you borrow money.
Also, whether you’re borrowing on something that is collateralized, such as a home or a car, that’s probably going to reduce the interest rate you owe because the person lending you money can get that asset back if you were unable to pay. But compounding will determine how much you pay in interest, so something compounded annually will have a smaller effect than something compounded daily.