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Since a loan by a borrower is an investment for the lender, both terms can apply to the same transaction, depending on the point of view. For a zero-coupon bond such as a US treasury bill, an annual effective discount rate may be specified instead of an effective interest rate, because zero coupon bonds trade at a discount from their face values.
The term annual percentage rate of charge (APR), [1] [2] corresponding sometimes to a nominal APR and sometimes to an effective APR (EAPR), [3] is the interest rate for a whole year (annualized), rather than just a monthly fee/rate, as applied on a loan, mortgage loan, credit card, [4] etc. It is a finance charge expressed as an annual rate.
The U.S. prime rate is in principle the interest rate at which a supermajority (3/4ths) of American banking institutions grant loans to their most creditworthy corporate clients. [1] As such, it serves as the de facto floor for private-sector lending, and is the baseline from which common "consumer" interest rates are set (e.g. credit card rates).
Household debt in Great Britain 2008-10. Household debt is the combined debt of all people in a household, including consumer debt and mortgage loans.A significant rise in the level of this debt coincides historically with many severe economic crises and was a cause of the U.S. and subsequent European economic crises of 2007–2012.
Interest rates vary widely. Some credit card loans are secured by real estate, and can be as low as 6 to 12% in the U.S. (2005). [citation needed] Typical credit cards have interest rates between 7 and 36% in the U.S., depending largely upon the bank's risk evaluation methods and the borrower's credit history.
Flat interest rates have the following advantages: They are easy to calculate and track: Flat interest rates require no calculations to blend principal and interest into a level payment and, as long as these are made on time, require no compounding calculations (see the example to the right). Flat rates keep loan commitments clear, transparent ...
The representative APR you state in your advert should not be less than the APR paid by at least 66% of consumers on the list.” [5] However, from 1 February 2011, this calculation changed. The BSI reports that: “The Representative APR must reflect at least 51% of business expected to result from the advertisement.
The APR is derived from the pattern of advances and repayments made during the agreement. Optional charges are usually not included in the APR calculation. [11] Interest rates on loans to consumers, whether mortgages or credit cards are most commonly determined with reference to a credit score.