An Introduction to Interest Rates
Interest is one of the more important aspects of dealing with
banks and other lenders... depending upon the type of account or
loan that you're dealing with, the interest can either make you
money or cost you money.
A variety of different factors can determine how much interest
you receive or how much you pay, in the case of loans and credit
lines.
Below you'll find several examples of accounts that are either
paid interest or that have interest charged against your
balance, as well as the factors that can influence the interest
rates of each.
Interest Rates and Savings
The usage of interest in savings accounts is one of the most
well known forms of interest... after all, the mark of a good
savings account is one that has a relatively high interest rate.
The interest paid can sometimes depend upon the specific type of
savings account that an individual has, and is more directly
influenced by rates set at the national or local level.
Of course, interest rates can also vary slightly from bank to
bank; before deciding upon a savings account at one bank it's
important to check other banks in the area to determine whether
you're getting the best interest rate available to you or not.
Interest Rates and Chequeing
Chequeing accounts are not as well known for their interest
rates, especially considering that it has only been within
recent years that having a chequeing account with an interest
rate became commonplace.
The interest rates that are offered on modern accounts tend to
be lower than those offered with savings accounts, however the
accounts have a much higher degree of accessibility than savings
accounts do.
The interest rate offered with a chequeing account is set in
much the way as those offered with savings accounts, meaning
that they are influenced by national and local rates and may
vary from lender to lender.
Interest Rates and Loans
Unlike chequeing or savings accounts where you want the interest
rate to be as high as possible, the interest rates associated
with loans mean that you'll be paying an additional amount added
on to the money that you borrow.
Loan interest rates can depend upon several factors, including
your credit rating, national and local interest rates, the type
of loan that you're applying for, the amount of the loan, and
even the collateral that you use to secure the loan.
Some types of loans have special repayment options that allow
you to make payments primarily toward interest if you so choose,
and others allow you to refinance your original loan in an
attempt to reduce your interest rate and your monthly payment.
Interest Rates and Credit Cards
The interest rates that are charged against the balance of
credit cards can be a bit confusing at times. These rates are
based upon the annual percentage rate, or APR, and are greatly
dependent upon your credit history and national factors.
Lower APR cards are generally offered to individuals who have
had good credit in the past, whereas cards with a higher APR are
offered to those individuals who have had credit problems.
The APR of the card that you use may fluctuate from month to
month, but it is the yearly average of the interest that you
must pay in addition to your card balance.
By keeping balances low or paying off the balance entirely, it's
not only easy to keep interest costs under control but you may
actually end up qualifying for a lower APR by showing yourself
to be willing and capable of making all of your payments on
time.
You may freely reprint this article provided the following
author's biography (including the live URL link) remains intact: