Different schools of thought provide varying perspectives on why we pay for the use of money:
: Championed by Eugen von Böhm-Bawerk , this theory emphasizes that humans naturally value present goods more than future goods (agio). Interest is the "discount" applied to future satisfaction. Fundamental Mathematical Components Theory of Interest
In practice, the interest rate is rarely a single "pure" number. It is typically composed of four distinct elements: Different schools of thought provide varying perspectives on
: Adjustments to protect the lender’s purchasing power against rising prices. Theory of Interest