Interest and debt

This course is a part of Finance and capital markets, a 10-course Topic series from Khan Academy.

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 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.

Continuous compound interest and e

This is an older tutorial (notice the low-res, bad handwriting) about one of the coolest numbers in reality and how it falls out of our innate desire to compound interest continuously.

Present value

If you gladly pay for a hamburger on Tuesday for a hamburger today, is it equivalent to paying for it today? A reasonable argument can be made that most everything in finance really boils down to "present value". So pay attention to this tutorial.

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).