Episode 7: How You Are Paying Double Interest On Your Bank Loans
It is also an illusion to think that you will gain by borrowing money from the bank to invest in T-bills or fund managers’ investment instruments.
Considering such a decision is the only best time to quote interest rates since both bank loans interest and gains on funds under management are quoted based on annual rates and/or previous years’ rates achieved by fund managers. Though past achievements are not a guarantee for new years, it’s a good start.
a. T-bill rates will never be higher than the interest charged by banks on loans because that is even the starting point or baseline for bank loans’ interest.
b. Though not impossible, it is very unlikely an interest on money market/ short term investments will yield higher interest than the bank rates on loans.
If it were not so, then the banks would just give all their deposits to the investment funds at the expense of the public taking such money as loans.
Episode 8: How You Are Paying Double Interest On Your Bank Loans
Due to the inability of people to repay interest-free loans from family and friends in the past, such people will have no choice than to go for a bank loan the next time they are in need of very short-term loans.
The worst of it is, they would have to contact money lenders where they would have to pay extremely high compounding interest, because the bank processes can not guarantee them the loan in the shortest period they need the loan.
Loans from family and friends could save such interest payment. Next time you take a loan from family and friends, make sure you pay on time to have the chance to access it again and avoid paying interest on bank loans or quick loans.