Learn the impact of nominal, real, and effective interest rates on investors and borrowers, including inflation's role and the cost of compounding.

This is an excerpt from Dollar Scholar, the Money newsletter where managing editor Julia Glum teaches you the modern money ...

is—it’s effectively a percentage of an amount over a year. If your savings account earns you a 0.05% interest per year (which is a REALLY terrible interest rate, honestly), you earn $5 in interest for ...