Interest is defined as the cost of borrowing money.

If we borrow money, we have to return it, right? And usually, we return it with a little bit more than what we originally borrowed. The quickest way to determine how much interest you pay is to take the total amount of repayment you've made, minus the total amount that you've borrowed, and the
difference is the interest. They are usually charged using a percentage and it is calculated annually.

Some of the common reasons we borrow money are, for example, to buy a house. We borrow money to buy a house.

Home Loan

Home loan is a way for you to purchase a house without paying for it in full. So now a home loan commonly charges you about 1.5% to 3% per annum. You'll see per annum a lot. Per annum means per year. So your home loan is charged at 1.5% to 3% per year.

Car Loan

Sometimes when we want to buy a car, we may not be able to afford it in its entirety. So we need to take a car loan and car loans usually attract a slightly higher interest rate. So you tend to pay about 2 to 3%. For a car loan, you tend to pay 2 to 3% per annum.

Personal Loan

A personal or term loan is a loan given to- you guessed it, as a person. So that money is given from the bank or financial institution to the person for their own uses. So a personal loan usually attracts 4 to 5% per annum.

Credit Cards

Credit cards are a slightly different animal entirely. They charge you 1 to 2% per month. So a credit card will charge you 1 to 2% per month. It might not sound like it's a lot but don't forget we're looking at per annum. So when I convert per month interest rate to per annum interest rates you're getting 12 to 24% per annum. As you can see, a credit card charges you the highest interest rates of all.

"Credit card charges you the highest interest rates of all."

So these are some examples of interest rates on common everyday things that we see: housing loans where you get 1.5 to 3% per year, car loans for 2 to 3% per year, personal loans for 4 to 5% per year. And of course, credit cards, which charge you monthly, but if you convert it per year, it's actually 12 to 24% per year.

Now, depending on where you are in the world, these rates might change. So some countries have higher interest rates, some have lower interest rates.

Comment below, tell us how much you're paying on your interest rates for whatever that you have out there: your housing loan, your car loans, your personal loan or even your credit cards.