Not yet registered? Create a OverBlog!

Create my blog

What affects US interest rates?

Interest (in financial terms) is the fiscal compensation given by a borrower of assets. Typically, it is a price paid for the use of borrowed money or money gained by funds deposited. Interest rates are the rates usually given as percentages at which interest is paid, typically offered by banks to customers. This article examines the factors which affect interest rates, particularly in the US.

Why interest rates are given and how they were affected by the recession

Why interest rates are given
Interest rates are given by banks as a ‘reward’ for the customers depositing their money in that account because, in connection with many other users’ money, banks use this. They have complicated, technical legal laws which mean that they can, to an extent, play with the money how they wish. Thus, they gain money themselves through investment through bankers investing this money. At least, that it is theory. To generalise, this is somewhat the cause of the recession. Bankers gambling with somewhat nebulous money which essentially was not there. The impact of the recession on US interest rates The recession had a significant impact on interest rates in the US. It is hard to describe briefly, because the recession threw treasuries, bond quotes, bond pricing, bond yields and much more into chaos, but generally speaking, interest rates fell. This is because the banks had less money to offer clients and the federal reserve generally kept inflation rates and interest rates low to try and stimulate economic activity.

How they differ for different people

Interest rates for the typical customer Typically, interest rates for standard customers are generally considered less preferable than those for richer customers. Obviously, there are many different financial circumstances to be considered, but making a broad generalisation, rates of interest on current accounts are typically less than 1% annually, often at around 0.5%. Saving accounts offer
Many banks in the US (and elsewhere), however, offer saving accounts available to the majority of customers with more preferable rates, typically in the range of 0.5% to 2.5%. Interest rates for the richer customer It is nigh-on impossible to give general interest rates for richer customers, because the bank is particular about their money due to the tendency of rich people to have nuanced financial situations. Nearly all banks have individual meetings with rich customers to discuss arrangements. That being, as general guidelines, the rates for Abbey (also known as Santander) for those who have between £50,000 and £5 million to their name are 1.5% to 2%, and Lloyds 2.6% for those with over £500,000.

Same category articles Banking

How to calculate your car loan repayments

How to calculate your car loan repayments

A car loan is an advance cash loan from the bank or car dealers in order to finance the purchase of a car. The characteristics of a car loan are the principal amount which is given by the value of the car, the interest rate, deposit amount, frequency of repayments and the number of years until the loan is paid off. A guideline of how you can calculate your car loan repayment, is outlined in this article.
What are HUD loans?

What are HUD loans?

When people are shopping around for a new home, they must also shop around for home loans. There are a variety of different home loans offered by banks and financial institutions, but one of the more popular types of loan is a HUD loan. Since the housing market crashed, many potential home buyers are looking into obtaining a HUD loan, because it can be more benefical to them.
What is inflation?

What is inflation?

There are many financial terms and jargons that people are unaware of. This article will be discussing the term inflation so that you can have a better understanding of the financial world.