The Mystery that is Compound Interest

7 min read

In my article “Why we need to teach Personal Finance” I have already alluded to the damage compound interest can do. Especially, when no one seems to understand how it works, and how quickly it can spiral out of control. That’s why I decided to write this article, so that hopefully we can gain some more insight, clear some confusion and take away some misconceptions about interest rates, and compound interest. Most forms of debt come at a cost. This cost is often referred to as interest. Interest is the money you pay to whoever is lending you the money…....

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Merle van den Akker Merle van den Akker is a PhD student in Behavioural Science, at the Warwick Business School. She studies the effect different payment methods, especially contactless and mobile methods, have on how e manage our personal finances. In her "free" time she writes articles on personal finance, behavioural science, behavioural finance and life as a PhD student, these are all published on Money on the Mind. With DDI, she writes on personal and behavioural finance, to ensure that knowledge from academia trickles into the mainsteam, and can help as many people as possible!