Charging interest

Applying interest
Making interest

Description

Charging interest involves the systematic application of a fee, typically expressed as a percentage, to borrowed money or delayed payments. This strategy incentivizes timely repayment, compensates lenders for risk and opportunity cost, and facilitates the allocation of financial resources. By establishing clear terms for borrowing, charging interest helps address issues of liquidity, encourages responsible lending and borrowing practices, and supports the functioning of credit markets and broader economic activity.