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Added interest rate versus cumulative inflation rate
An '''interest rate''' is a rate that is charged on a [[loan]] or a rate given for a [[deposit]] to a [[bank]] that is a percent of the total [[money]] amount. Excess interest rates are called [[usury]] and are against the law. However, an interest rate that was considered as usury 50 years ago, is now "the new normal". Financial institutions can usually charge interest rates that are greater than individuals can charge when they make private loans to other individuals or via [[credit cards]].
An '''interest rate''' is a rate that is charged on a [[loan]] or a rate given for a [[deposit]] to a [[bank]] that is a percent of the total [[money]] amount. Excess interest rates are called [[usury]] and are against the law. However, an interest rate that was considered as usury 50 years ago, is now "the new normal". Financial institutions can usually charge interest rates that are greater than individuals can charge when they make private loans to other individuals or via [[credit cards]].
==Interest Rates of Bank Deposits==
While [[banks]] can charge fees for services, mostly people depositing [[money]] in a bank will seem to see the amount of that money slightly increase over a long time due to [[interest rate]]s that the bank will pay. However, for several years now the [[inflation rate]] (see also [[Consumer Price Index]]) is greater than the interest money paid by the banks, thus one actually loses [[purchasing power|money]] compared to investing in [[tangibles]] or [[inflation hedge]]s. For example, a [[good]] or service costing $1000 in 2004, the same item would cost $1,242.89<ref>http://www.usinflationcalculator.com The [[US Inflation Calculator]] measures how the [[buying power]] or [[purchasing power]] of the [[US dollar]] has changed over the years by using the latest [[Bureau of Labor Statistics]] ([[BLS]]) [[inflation]] information provided in the [[Consumer Price Index]] ([[CPI]]). http://www.usinflationcalculator.com/frequently-asked-questions-faqs/#HowInflationCalculatorWorks Accessed April 6, 2014</ref> ten years later in 2014 due to the cumulative rate of inflation of 24.3% over those ten years.
Interest rates can be either fixed ([[fixed rates]]) or they can change ([[adjustable rates]]). Rates on [[savings]] and [[checking]] accounts in a bank will usually change over time whereas a [[certificate of deposit]] will usually have a fixed rate for the life of the contract.
Interest rates can be either fixed ([[fixed rates]]) or they can change ([[adjustable rates]]). Rates on [[savings]] and [[checking]] accounts in a bank will usually change over time whereas a [[certificate of deposit]] will usually have a fixed rate for the life of the contract.