Interest Rate Calculator

Interest rates across the world

In regard of how is the interest set up in most of the countries across the world, the reference rate is determined and published by the by the central bank of each state, for instance in United State case this institution is called the Federal Reserve.

This is a measure of the cost of the money as it both indicates how much you will most probably to pay on interest in order to finance and how much you will most probably earn in case you have some savings and want to deposit them.

Central banks control and fix the levels of the interest rates in order to have a proper control on how prices on goods and services evolve. If the interest rates are high then borrowing money becomes more expensive, which further on impact negatively the economy of a state or region as the prices will most probably fall.

On the other hand high interest rates stimulate people in making savings and deposits in. In case of low interest rates people can take easy credits, finance their business or start new ones which mean it stimulates economic growth.

The players in the bank system are: the central bank that lends money to private banks at a certain rate the authority believes will keep prices from changing in a radical manner. Any changes in prices may cause either inflation or deflation and both economic phenomenon are considered risky from economic and financial point of view.

Players in the banking system are the clients too and they can be a physical person or juridical entities that interact with the system in this type of transactions and/or services:

• Earning interest from savings and deposits of all types. In this position clients seek the highest interest rate on the market as it is the measure of the profitability of the investment.

• Getting a personal project or business financed through a loan or mortgage no matter of their types. In this case clients search for the lowest interest rate as this is the cost of borrowing money.

• Making payments and transfer money to third parties, family or friends by using any of the channels banks offer. In this case usually banks ask for a commission which usually depends on the transaction value.

The interest rate is a negotiable figure between the client and the bank and so it should be addressed carefully by clients since banks are oriented towards obtaining profits which comes from the difference between the total interest received and total interest paid.

How to get attractive interest rates

• In case of loans or mortgages in order to get attractive interest rates you are asked to have a good credit score and history. This indicator comes with time by paying in due time your bills and debts, as well as by starting to save.

• Another way to get lower interest rates is to use multiple services from the same bank as they tend to stimulate loyal clients.

• In case of savings or deposits accounts in order to get higher interest rates you have to check with the bank which are the limits in terms of minimum deposit/minimum required to be saved for certain interest rate. Or you may ask if they have any policy of offering higher interest rates on savings in care money are deposited for longer periods.

How does this interest rate calculator work?

In case you are analyzing multiple offers before taking a loan, this interest rate calculator can help you discover the effective interest rate you are asked to pay for a specific loan amount, monthly payment level and repayment term. Practically the variables it takes account of are the ones you will most probably get from your bank:

• Loan amount to be taken;

• Payment frequency that can be weekly, bi-weekly, monthly, bi-monthly, quarterly, semi-annually or even annually depending on the loan type. This is sufficient flexible to allow you perform calculations independent of the loan type (personal, mortgage, business or student loan).

• Regular payment value for the frequency specified.

• Loan term in years.

• Start date that is used further on to forecast the moment when you will be debt free.