April 9, 2012
Interest Rates 101
Find out why it's important to teach your kids about interest rates before they leave home.
Before your kids fly the nest, they need to understand how interest rates work – especially rates paid on loans. One key lesson is that your credit score can have a huge impact on what rate you're able to secure.
For example, someone with strong credit might qualify for a credit card rate that's 10 or more percentage points lower than someone with poor credit. And shaving one or two points off a 30-year mortgage could save tens of thousands of dollars over the life of the loan.
They also need to know the difference between fixed and adjustable rates; and that rates on new credit cards may go up after the introductory period ends.
Bottom line: Make sure your kids understand what interest rate they're getting before applying for a loan.
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