Compound interest: How it can help and what it can cost you

Compound interest: Friend or Foe?

Financial terminology and acronyms can be really tricky to understand.

We really like this short from Sorted about compound interest. We really think it's worth the 3 minutes!

But what is it?

Compound interest is essentially interest on interest.

When you're putting money into a savings account you earn interest.  The interest is calculated each month based on the balance of the account.

The same happens with your loan, with interest being charged on the balance of your loan at the interest rate shown in your loan contract.

That means that paying a little extra off your loan can save you money, and make that debt-free date even closer than you think!

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How this links to your loan with Money Sweetspot

That's why we've created Sweetspot Points- a way of earning Points you can redeem for extra dollars off your loan.

By reading this article, and watching the video you will earn 1 Sweetspot Point, which can be redeemed for $2 off your loan. it might not sound like a lot, but the video helps to explain why it could actually lead to a much bigger benefit!

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This was originally posted as an education article on the Money Sweetspot customer portal. If you read this as one of our customers, you would've earned some money off your loan! Do the mahi, get the treats. Find out more.

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