Understanding Debt and Interest Rates

Debt is a vital aspect of understanding how money works. It can either be your friend or your enemy depending on your financial situation. The key is to ensure that you are earning more than the cost of the debt. Interest rates play a crucial role in debt, accounting for the risk factor between borrowers and lenders. Higher interest rates are associated with higher risk, while lower rates are often secured by collateral. Credit card debt is the most common and easily accumulated form of debt, with interest rates as high as 20%. To tackle debt effectively, it's important to prioritize paying off the debts with the highest interest rates first.