Interest and debt

This course is a part of Personal finance, a 9-course Topic series from Khan Academy.

How is interest calculated? What factors influence your credit score? What is the impact of only paying the minimum balance on your credit card? Build your knowledge of these key financial topics.

This course contains 6 segments:

Compound interest basics

Interest is the basis of modern capital markets. Depending on whether you are lending or borrowing, it can be viewed as a return on an asset (lending) or the cost of capital (borrowing). This tutorial gives an introduction to this fundamental concept, including what it means to compound. It also gives a rule of thumb that might make it easy to do some rough interest calculations in your head.

Interest basics

This is a good introduction to the basic concept of interest. We will warn you that it is an older video so Sal's sound and handwriting weren't quite up to snuff then.

Credit basics

Credit cards and loans

Most of us have borrowed to buy something. Credit cards, in particular, can be quite convenient (but dangerous if not used in moderation). This tutorial explains credit card interest, how credit card companies make money and a far more silly way of borrowing money called "payday" loans.

Debt repayment

The majority of Americans have some form of debt, whether it's a student loan, car loan, or mortgage. This tutorial analyzes common strategies for paying back what you owe.

Personal bankruptcy

Back in the day (like medieval Europe), you would actually be thrown in jail if you couldn't pay your debts (debtor's prison). That seemed like a pretty awful thing to do (not to mention that lenders are much less likely to be paid by someone rotting in prison), so governments created an "out" called bankruptcy (which, as you'll see, is a pseudo-painful "reset" button on your finances).