Interest Rates

Taken from Houghtaling's Handbook of Useful Information ©1889.

Interest, How it Eats.
One of the causes of bankruptcy is that so few persons properly estimate the difference between a high and a low rate of interest, and therefore often borrow money at a ruinous rate that no legitimate business can stand. Few have figured on the difference between 6 and 8 per cent. One dollar loaned for one hundred years at six per cent, with the interested collected annually and added to the principal, will amount to $340. At eight per cent, it amounts to $2,203, or nearly seven times as much. At three per cent, the usual rate of interest in England it amounts to $19.25; whereas, at ten per cent, which has been a very common rate in the United States, it is $13,809, or about seven hundred times as much. AT twelve per cent, it amounts to $85,075, or more than four thousand times as much. At eighteen per cent, it amounts to $15,145,007. At twenty-four per cent (which we sometimes hear talked of), it reaches the enormous sum of $2,551,799,404.

One hundred dollars borrowed at six per cent, with the interested compounded annually, will amount to $1,842 in fifty years, while the same one hundred dollars borrowed at eight per cent, will amount to $4,690 in fifty years. One thousand dollars at ten per cent, compounded, will run up to $117,390 in fifty years.