You probably know Times Interest Earned (TIE) as the interest calculation factor used by banks and other lenders to figure out how much you’ll have to pay back on a loan. But did you know that TIE is also used by Google Adsense, Yahoo!
Finance, and many other online advertising platforms to figure out how much you’ll earn from displaying ads on your website or blog? In this article, we’ll explore what TIE is, how it’s calculated, and some of the different uses it has in the online advertising world.
What is Times Interest Earned?
Times interest earned is the total amount of interest earned on a loan over the course of the loan’s term. This figure reflects both the principal and the interest paid on a loan. Times interest earned can be important to calculate when looking to pay off a loan early or when considering refinancing.
How Times Interest Earned is Calculated
Times interest earned is determined by taking the total principal amount of your loan and dividing it by the number of days the loan was outstanding. This number is then multiplied by 1.05 to reflect the rate at which the bank computes interest on loans.
Uses for Times Interest Earned
Times interest earned can be used in a variety of ways. For example, it can be used to pay down debt, save for a future goal, or cover short-term expenses. Additionally, some people may use it to cover their monthly bills.
Though the stock market continues to fluctuate and be a source of confusion for many, understanding what Times Interest Earned (TIE) is essential in order to make informed investment decisions. TIE shows you how much interest your dollar has earned over time based on the interest rate set by the Federal Reserve. This can help you see when it’s a good time to buy or sell stocks, as well as gauge whether you are paying too much in interest fees.