Concept in Definition ABC

Interest is an index used in economy Y finance to record the cost effectiveness savings or the cost of a loan.

Interest is called the different types of index that are used in the measurement of profitability of savings or that are incorporated into the value of a loan.

Interest is a relationship between money and given time that can benefit a saver who decides to invest his money in a bank fund, or that is added to the final cost of a person or entity that decides to obtain a loan or credit. Interest is calculated as a percentage and is often applied monthly or annually. That is, interest allows a person who wants to generate income from his savings, he can place them in an account at the Bank, and this one will give you a gain stipulated monthly according to the amount of money invested and the time during which you agree to leave that amount in a fixed term, for example. On the other hand, if a company or individual has the need or desire to borrow money, the lender will apply an interest on the money borrowed that will depend on the time in which you commit to return it and the amount of cash that is extended to the interested.

There are two types of indicators that allow you to measure interest. The nominal interest rate or TIN, which is the percentage applied when making the interest payment. Y the rate equivalent annual or APR, which measures what the profit is at the end of a given year, in normalized form.

Interest is applied in all types of financial operations and is one of the most considered values ​​when carrying out economic transactions in the short, medium and long term.