A security interest is a property right granted to ensure repayment of a debt. It can be applied to personal property or real estate, and allows the creditor to reclaim collateral if the debtor defaults. A variable fee is a type of security interest that allows the creditor to take control of certain assets after […]
An annuity is an investment vehicle where you invest a fixed amount of money at the beginning or end of several fixed time periods. The maturity value of the annuity is the amount invested plus interest, which can be calculated using compound interest formulas. For annuities, a formula is used to calculate the maturity value […]
When looking for an investment property mortgage, it’s important to shop around and compare options. Gather information about the property and contact at least three lenders to get the best interest rate, APR, and closing cost estimate. When evaluating options, consider the APR instead of just the interest rate to determine the true cost of […]
Insurance companies require an “insurable interest” before issuing a policy, meaning the person taking out the insurance will suffer a loss if something happens to the insured object or person. Insurable interest is easy to establish for property insurance, but more complicated for individuals. Lenders are also considered to have an insurable interest. The requirement […]
Deposit interest rates vary depending on the type of account and the prime rate in the country where it’s established. Savings accounts are low-risk but have modest returns, while certificates of deposit offer higher returns for longer-term investments. Self-directed retirement accounts also offer tax benefits. Consumers should compare rates before choosing a provider, including online […]
Interest to maturity means the full amount of interest earned on an investment is paid on its maturity date. Bonds that offer this are sometimes called “zero coupon” or “stripe” bonds. Interest is extra money payable to the lender as compensation for being out of pocket. This type of investment is suited to people who […]
In the US, mortgage lenders may require an escrow account to hold monthly contributions towards hazard insurance and property taxes. 14 states require lenders to pay interest on deposit accounts, but in the other 36 states borrowers can earn interest by closing their escrow accounts and paying taxes and insurance themselves. However, borrowers must determine […]
Royalty interest is a share of the products of an oil or gas well held by a third party who invests in the initial start-up costs. They do not share production costs and the interest expires when the lease or well stops producing. The arrangement is specified in a contract, and the productivity of a […]
Imputed interest is a finance charge assigned by tax authorities to loans and investments without declared interest. Tax codes in Europe, Austria, and Hong Kong recognize imputed interest, while in the US, it is assessed against non-interest bearing financial instruments and loans. The applicable federal rate (AFR) determines the minimum amount of interest that must […]
Human interest stories add a personal touch to news, often featuring interviews with those affected or reporting on people facing challenges. They can be emotional or entertaining and are often included in news sources to increase audience engagement. While they may not be objective journalism, they offer a break from traditional news reporting. A lot […]
Consider maintaining a positive balance, paying a minimum amount monthly, being a student, and paying a fee when choosing a checking account with a high interest rate. Online accounts offer higher rates, and some banks offer bonuses or fixed monthly bonuses. Overdraft services and minimum monthly payments may affect interest rates. Student accounts offer overdraft […]
Capitalized interest is when lenders defer interest payments on loans, allowing borrowers to avoid repayment until they earn money from the invested funds. Businesses must meet three requirements to apply for a compound interest loan, while students often face negative consequences with compounded interest on education loans. Capitalized interest is a process in which lenders […]
Operating interest is the legal right a company has over assets such as land or natural resources, which can provide a competitive advantage. Business insurance policies can help offset risks associated with dangerous operations, and agreements may include equipment or facilities. Companies may not include operating interest on their balance sheet, but disclose it in […]
A purchase money security interest is a credit agreement that allows a seller to repossess future goods if a buyer defaults on payments, protecting the seller from financial problems. It is useful for businesses that hold inventory and gives the seller priority over other creditors. A purchase money security interest is a type of credit […]
Gross interest is the annual payment on an investment before taxes or deductions. Net interest is the payment after deductions. Gross interest is calculated by applying the interest rate to the initial principal. Gross interest should not be confused with the Annual Gross Equivalency Rate (AER), which is a virtual fee for investments paid on […]
Nominal interest rates and inflation affect a nation’s currency purchasing power. Inflation erodes the nominal rate, and the real interest rate is calculated by subtracting inflation from the nominal rate. In a free market economy, interest rates are set by the market, and financial institutions offer nominal rates based on various factors. Unnatural inflation occurs […]
The interest method calculates interest income or expense by multiplying the book value of debt or accounts receivable by the effective interest rate. It allows for a fixed interest rate to be charged but different dollar amounts to be charged each period. The method is used by investors to analyze bond discounts or premiums and […]
Covered interest rate parity involves taking advantage of the best interest rates in two countries by insuring assets using a currency conversion approach. This strategy requires speed and careful organization to ensure success. A covered interest rate parity is a situation in which the prevailing interest rates of two nations are close but not equal, […]
Special interest groups are formed by people with shared beliefs or goals, and seek to make changes that benefit their constituency. They often use money and political influence to achieve their goals, and can range from small local groups to large national organizations. Political donations and endorsements are common methods of influence. A special interest […]
A Community Interest Company (CIC) in the UK is a type of company that benefits the public but does not qualify for charitable status. It offers more flexibility than charities but does not have the same tax advantages. CICs cannot engage in illegal activity or politically motivated activities and cannot be formed to serve a […]
