When you are reading the newspaper, you may just skip the section of finance. In fact you may think that finance is not something related to your. Yes if you are not actively involved in the financial market you do not need to bother about most of the things about finance. However, there are still something that you should know about. They will actually affect your personal financial situation!

So, what should you know about finance? Firstly you need to know how finance can affect your life. If you are going to buy a house or a car, you will probably need to seek for a loan. You may also use your credit card to purchase in your daily life. They are all about finance! And in the above two cases, what will actually affect your is the interest rates. You will need to pay more interest if the interest rate is higher. To this end you may know that the interest rate may affect you greatly even if you do not invest in the stock market or forex market. This is all you should know about finance.

There are basically two kinds of interest rates when loans are considered.

The first one is fixed rate. As from the word fixed, you will know that your interest rate will be fixed no matter how other interest rates fluctuate. This can be an advantage if you get a very low fixed interest rate. However, if the interest rate goes down, you may also end up with paying more interest then you should have paid since your interest rate is fixed.

The other kind of interest rate is the balloon rate. Contrary to the fixed rate, your interest rate will fluctuate with the other interest rates. You may think this is not good since you will need to pay more interest if the rate goes up. However, there are always two sides of a coin. This can be an advantage too! It is because you will need to pay less interest if the rate goes down.

As mentioned, the most common thing in finance you may encounter is the credit card. Most people will have at least one card. When you purchase with your card, the company which issues the card, usually the bank, will pay on behalf of you. To this end it is just like a loan. However, if you can fully repay within the grace period, they will not charge you any interest. On the contrary, if you only pay the minimum, they will start charge you the interest. So be careful of this when you are purchasing with your credit cards!