The rate of interest is the percentage by which an amount will increase.

Managing risk

Financial education

This unit teaches how to evaluate financial advice, manage risk effectively, and understand insurance as a safety net.

Making informed financial decisions

Subjects which particular individuals may be sensitive to, eg, adoption, migration, bereavement or death, divorce, poverty, deprivation.

Depiction or discussion of sensitive content

A variable interest rate loan currently at 6.8%

Lucas' parents are offered two options for borrowing money. Which option seems better for the first year?

The interest is fixed so you know how much you need to pay each month.

There could be variable rates that drop below the fixed rate whilst repaying.

There could be variable rates that are higher than the fixed rate.

Which of the following could be risks associated with choosing a fixed interest rate loan?

Laura's cousin borrows £75 000. Her loan has a variable interest rate which is initially 6.65%. What is the balance of her loan at the end of year?

Laura's cousin borrows £75 000. Her loan has a variable interest rate which is initially 6.65%. How much money has been added to the loan as interest?

Laura's cousin borrows £75 000. Her loan has a variable interest rate which is initially 6.65% but drops to 5.3% the following year. What is the balance of her loan at the end of the second year?

Laura's cousin borrows £75 000. Her loan has a variable interest rate which is initially 6.65% but drops to 5.3% the following year. How much money has been added to the loan as interest?

Put the money into a zero interest savings account.

Put the money into a low interest savings account.

Put the money into a high interest savings account.

Jacob wants to save money. Which option should he pick?

Jun wants to borrow money. Which option should he pick?

I invest £50 000 into a variable savings account. In the first year the interest rate is 3%. How much money will I have after 1 year?

I invest £50 000 into a variable savings account. In the first year the interest rate is 3% and in the second year the interest rate is 4.7%. How much money will I have at the end of the 2 years?

I invest £50 000 into a variable savings account. In the first year, the interest rate is 3% and in the second year, the interest rate is 4.7%. How much interest was earned over the 2 years?

I invest £50 000 into a variable savings account. In the first year the interest rate is 3% and in the second year the interest rate is 4.7%. What is the overall percentage increase?

Content guidance

Depiction or discussion of sensitive content

Adult supervision recommended

Starter Quiz