Interest

From CaseyPedia

Interest is a fee that is assessed periodically on the amount of a loan. Interest is designed to compensate the lender for two factors:

• The time value of money, which is the lost opportunity from using the amount of the loan for something else. This value does not vary across borrowers and lenders.
• The risk of non-payment by the borrower. This typically depends on the borrower's creditworthiness, which is frequently expressed in terms of a FICO score and may also vary with the type of the loan. Secured loans such as mortgages frequently pay lower interest rates than unsecured debt like credit cards.

If a borrower fails to pay the full amount of the interest on his loan on a regular basis, the loan balance will increase over time. This is one of the reasons that Casey Serin's net worth continues to decline.