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An interest rate is the amount of money a bank can charge on the loan that they provide you. That is how they make their profit. If they didn't charge an interest rate and just loaned out money, then there's no way they can make money off of the loan.
Wiki User
∙ 12y ago
Wiki User
∙ 12y agoThe interest rate is the amount of money the loan provider charges to make the loan. The loan provider gets the benefit for taking the risk on the loan.
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What does Usury mean?
As a general definition, usury is loaning money at extravagant interest rates. The legal definition varies. The practiced of lending money to people, especially making them pay unfairly high rates of interest.
What is the definition of fixed interest rates?
An interest rate that remains constant throughout the agreed term. If changes in the goverment base rate occur where commercial rates rise or fall you wont be affected.
What is the definition of cheap money in economic terms?
This idea has to do with a period of low interest rates to boost spending and investments. Cheap money is the idea that since interest rates are low, from the bank, then it is cheaper to borrow that money and invest it in something.
When we talk of interest rates are these the borrowing rates or the lending rates?
When we talk of interest rates , we are talking of the interest rate on the total amount of money borrowed by a person.
Is prime rates the same as interest rates?
Prime rates are the interest rates most banks charge their customers for loans while interest rates are the rates charged to borrow money and come in many forms.
Definition of a credit union?
The definition of Credit Union is: a cooperative group that makes loans to its members at low rates if interest. Reference: Random House Webster's College Dictionary.
Is the price at which bonds sell determined by the interaction of stated rates of interest and market rates of interest?
Yes, the price at which bonds sell are determined by the interaction of stated rates of interest and market rates of interest.
How beneficial are CD interest rates?
What is beneficial about CD interest rates is that they are constant for the specified period of time. Sometimes interest rates can go up or down but CD interest rates would stay the same.
What is the definition of fixed mortgages?
A fixed mortgage is a type of loan where the rate of interest stays the same. Other mortgages' interest rates often fluctuate, but the rate of a fixed mortgage is constant.
Do interest rates rise when inflation declines?
Interest rates are simply the price of money. When inflation declines, interest rates typically decline also.
What is the benefit of fixed deposit interest rates?
Fixed deposit interest rates is a guaranteed interest rate for the entire term of an investment. They allow for the customer to earn high interest rates.
How do financial institutions calculate interest rates?
Financial institutions base their interest rates on fluctuation of today's market. If the market is doing well then interest rates are high. If the market is down, interest rates goes down along with it.
