Personal Finance Basics — How borrowing works, and how to pay it back smartly.
Debt is borrowing now and repaying more later. It is a tool that can build your future or trap you, depending on the interest rate and what you borrow for.
Principal vs interest: Principal is the amount you borrowed. Interest is the extra cost charged for borrowing it.
Debt that funds something likely to grow your income or wealth, like education or a home, is often called good debt. High interest debt for consumption, like carrying a credit card balance, is the kind to avoid.
On an amortized loan, early payments go mostly to interest because the balance is still large. Paying extra early saves a lot.
15 practice questions with explanations. Free, and no account is needed to start.