Interest costs

Interest costs refer to the expense incurred by borrowing funds, which must be repaid with an additional amount over the principal sum. These costs arise from various types of loans, including personal loans, mortgages, and credit cards. Interest costs are typically calculated as a percentage of the outstanding principal and can be fixed or variable rates based on market conditions. Managing interest costs effectively is crucial for financial health, as high interest payments can significantly affect an individual’s or a company's budget and overall financial stability. Understanding and monitoring your interest costs can help you make informed borrowing decisions and optimize your financial planning.