The repo rate (repurchase rate) is the interest rate at which commercial banks can borrow money from the Reserve Bank. Repo rate South African banks in the private sector, like ABSA, Standard Bank, FNB and Nedbank, can borrow money from the South African Reserve Bank (SARB). The repo rate is the interest rate SARB charges [...]

The prime interest rate, prime lending rate, or prime overdraft rate, is a reference interest rate commercial banks use when issuing variable interest rate loans to their customers. Prime interest rate When you borrow money from a bank, the interest rate that you will be charged by the bank, is usually specified in terms of [...]

The definitions I’ll cover in this post are: interest interest rate compound interest nominal interest rate effective interest rate Interest is a fee, for the privilege of using borrowed money.

Since interest is just another expense, if your “passive” income is enough to pay the interest on your loans, and all your other expenses, for the rest of your life, then you are still financially free.

If you pay premiums or contributions to a savings plan on which you only earn interest of say 9%, but on the other hand you have to pay 19% interest on your bank overdraft account, and you continue with this practice over a period of time, you will eventually save yourself bankrupt!