Interest & Yield
The rate on the sticker is rarely the rate you get. Learn to read the real one.
What your money actually earns — simple vs compound interest, APR vs APY, and nominal vs real returns. The difference between the rate on the label and the rate in your pocket, with worked numbers and interactive charts.
Money has a clock, and interest is the price it charges for time. Sounds simple — until you notice almost every rate you’re quoted is misleading on purpose: a loan at “12%” can quietly cost more, a savings account at “12%” can quietly pay more, and a bond yielding “5%” can leave you poorer than when you started.
This topic untangles all three traps. You’ll learn:
- Simple vs compound interest — earning on your principal versus earning on your interest too, and why how often it compounds changes the answer.
- Compounding frequency — why the same rate pays out differently depending on the schedule.
- APR vs APY — the quoted rate versus the rate you actually get once compounding is baked in.
- Who quotes what — why lenders and savers each advertise whichever number flatters them.
- Nominal vs real — stripping out inflation to see what your money can actually buy.
Get these three and you’ll never again take a rate at face value — the foundation for every loan, savings, and bond decision that follows.
In this topic
- 1 Simple vs Compound Interest: The Two Ways Money Grows Simple interest grows in a straight line; compound interest snowballs. Learn both formulas, see the gap with worked numbers, frequency, and continuous compounding. 9 min
- 2 APR vs APY: The Rate on the Label vs the Rate You Get APR is the rate they quote you; APY (the effective annual rate) is what you actually earn or pay once compounding kicks in. Worked numbers, tables, and a live dial. 9 min
- 3 Nominal vs Real: What Your Money Can Actually Buy The number on your statement isn't your real return. Learn nominal vs real rates, the Fisher equation, negative real yields, and the crossterm — with worked numbers. 9 min
- 4 Final Exam: Interest & Yield The graded, locked capstone exam for the Interest & Yield course — covering simple vs compound interest, APR vs APY, and nominal vs real returns. Score 70% to pass. 15 min
Mark course as finished
Done with every lesson? Lock it in — your progress is saved on this device.