dobânzi

Dobânzi, in Romanian, refers to interest. It is the cost of borrowing money or the reward for lending money. When someone borrows money, such as a loan from a bank, they are charged interest on the principal amount. This interest is usually expressed as a percentage of the principal and is added over a period of time. Conversely, when someone deposits money in a savings account or invests in certain financial instruments, they earn interest on their money. This is essentially a payment for allowing a financial institution to use their funds.

There are different types of interest, including simple interest and compound interest. Simple interest is calculated only on the initial principal amount. Compound interest, on the other hand, is calculated on the principal amount plus any accumulated interest from previous periods. This means that compound interest can grow an investment or debt much faster than simple interest.

The interest rate is the percentage at which interest is charged or earned. It can be fixed, meaning it remains the same for the life of the loan or investment, or variable, meaning it can fluctuate based on market conditions. Central banks often set benchmark interest rates, which influence the rates offered by commercial banks for loans and deposits. Understanding dobânzi is crucial for managing personal finances, making informed investment decisions, and comprehending economic policies.