How do bank interest rates work?

Bank interest rates are the amount of money that a financial institution pays to customers for holding their deposits. Interest rates are set by the bank based on a variety of factors, including the cost of borrowing money, the rate of inflation, and the demand for loans. Banks use interest rates to encourage customers to save their money and to lend money to borrowers. Typically, the higher the interest rate, the more attractive it is for customers to save their money in a bank account. On the other hand, borrowers may be deterred by higher interest rates as they increase the cost of borrowing money. It’s important to note that interest rates can fluctuate over time, so it’s a good idea to regularly check with your bank to ensure you are getting the best rates.

Learning financial topics and understand how it actually impacts you personally can be daunting, but our mobile app makes it easier to understand a variety of effects such as interest rates, inflation and taxation on your long-term savings.

Learn more

Similar Questions

How to calculate apr from daily interest rate?

To calculate the APR (Annual Percentage Rate) from a daily interest rate, you need to first determine the daily interest rate as a...

How to lower the interest rate?

If you’re looking to lower your interest rate, there are a few steps you can take. First, make sure you have a good credit s...

How to lower credit card interest rate?

If you’re looking to lower your credit card interest rate, there are several steps you can take. First, you can try calling ...

Ready to get started?

Download our app and start gaining insight into your current and future finances.