Posts Tagged ‘interest rates finance and economy’


Understanding the Basics of Interest Rates

by yudaica2013 ·

The invention of tools such as interest rates can get different yields to various organizations especially banking, this has contributed to the acquisition of important sources of income for them, allowing these possess qualities that help to benefit the design of financial aspects ordinary people as a loan or credit of any kind. Many writers such as Anna Belknap offer more in-depth analysis. Interest rates are the main source of revenue for banks today, because the returns they get from allowing these funds to other activities such as those mentioned above. But what can be defined by interest rates? Interest rates are the marginal rate to be paid or provided to financial processes such as loans or credits, for the use of third party capital, bone can be defined specifically as the charge to be paid in certain time by obtaining a capital amount or for a specific purpose, this amount can be measured in percentages according to the entity or person lender. Today the setting of interest rates is based on two factors in most cases, they are: Central banks of each country regulate an interest rate as the national economic performance, this influence directly with interest rates that banks provide to the public. The behavior of investors of one country movements also directly influences interest rates, because if the stock price is rising so the demand for money to buy them also increases, therefore the interest rate for such financial flows tend to rise. To broaden your perception, visit Hedvig Hricak.

It is important to note that the above concept is applied to maintain a stable macro economy. Today due to the amount of financial transactions containing these interest rate can be categorized in various ways, including the more important we find some such as: Lending rate: the interest rate posted by banks to loan of an amount that makes users, it is called active because the interests are in favor of the bank. passive interest rates: the percentage paid by a lending institution either a bank or entity to whom an amount of money deposited by any of the ways that this activity exists. It is called passive because this is for the user. external interest rates: the percentage paid annually for the use of foreign capital, the rate is defined by the lenders countries or countries where the resource is awarded money is important to mention that thanks to the creation of interest rates will encourage two areas of vital importance today, including the consumption and savings, as interest rate call it something higher, encouraged individual savings and low interest rate stimulates bone consumption expenditure individual, which contributes significantly to the financial growth of private and government entities.