Questions tagged [interest-rate]

a generic tag for question on rate of interest applicable. Ideally should be accompanied by geography tag and other specific subject tags

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99
votes
14answers
10k views

Should I finance a new home theater at 0% even though I have the cash for it?

My wife and I are considering buying a home theater - plasma TV & new stereo - on Black Friday this year. We do have the cash for it, but Best Buy is offering 0% financing for up to 3 years on ...
61
votes
12answers
26k views

What should I do with $4,000 cash and High Interest Debt?

I'm receiving a $4,000 gift. I'm going to put $1,000 in an account. Next - with this gift I can pay off a credit card with a 23% APR or I can make a 15% dent in a 26% APR credit card. Do I pay off ...
61
votes
3answers
7k views

How can I invest in country A to take advantage of their great interest rate while I live in country B?

If I live in the US, for example, where current interest rates are practically nil, how can I take advantage of the fact that interest rates in Australia are almost 5%?
47
votes
10answers
22k views

I have 9,000 cash. What debt should I pay first?

I have 9,000 cash right now and I want to use it to pay some debt. It won't cover all, but I want to spend it on the best way possible. These are my current debts: Loan balance 3,867.35 - 23.55% ...
40
votes
10answers
11k views

How to rescue my money from negative interest?

My bank has announced negative interest rates starting Q1 2016. I have CHF 250'000 in that savings account (Swiss Francs). Now, pretty much all other banks will probably follow suit soon, if they ...
34
votes
7answers
12k views

Can I lend a small amount of my own money to a bank at the federal funds rate?

I have a dollar that I won't be needing tonight, and I hear that banks are in the market for short-term loans. In fact, the present Fed funds rate is higher than the interest rate on any savings ...
31
votes
5answers
6k views

Preapproved for mortgage loan but won't tell me interest rates

First Time Home Buyer/Shopper Spent about 30 minutes on the phone with Quicken Loans (Rocket Mortgage). I provided all of the expected information when running a credit check and painting a financial ...
29
votes
8answers
14k views

What stops you from using fixed income in developing countries? [duplicate]

I was recently visiting a developing country and noticed that their interest rates are very high — ~15% with government bonds promising ~13% annually. I was just thinking, if the bid ask spread for ...
27
votes
2answers
3k views

What does "Yield Curve" mean?

In the financial news we often read about the Yield Curve. What exactly is it?
26
votes
7answers
21k views

Should I pay for a computer up-front or on finance?

This reads a bit like a home-work question, but this is actually my situation. The job I've taken is a BYOD (bring your own device), workplace and I prefer to use my own equipment. I've just started ...
24
votes
7answers
14k views

Why are interest rates on saving accounts so low in USA and Europe?

For example, in USA interest rates are 1-2% percents, while in Russia it is normal to have up to 8% anually for US dollars account. Same goes for Euro. For Russian ruble it can be up to 12%, but with ...
20
votes
5answers
9k views

Is it possible to lock in a high interest rate in savings, when general interest rates are high?

I've heard anecdotes about high-interest savings accounts (4.5% around 2006, even 8% in the 80s), that were opened when interest rates (federal funds rate) were high. The implication seemed to be ...
20
votes
3answers
4k views

Are banks really making less profit when interest rates are low? [closed]

I've read this claim many times in the news: banks are making less profit from the lending business when interest rates are historically low. Isn't this a bogus claim? Let me clarify: To loan money ...
20
votes
3answers
24k views

Should I pay off zero interest debt early?

My cash reserves are around $11k, including an emergency fund of about a month and a half, and I budget rigorously. The only debt I have is $7k at zero interest, paid at $300/month, and it's from a ...
19
votes
6answers
9k views

Pay everything now or gradually?

I have around $45,800 is my bank account and have the following three loans: Loan 1: $6,114 with 6.8% interest rate Loan 2: $14,649.21 with 6.8% interest rate Loan 3: $2,927.25 with 5.750% Should I ...
19
votes
4answers
57k views

Does "monthly interest of 1.5% AER" mean that I will get a 1.5% interest every month?

I'll soon be 16 and I'm comparing a few high interest savings / current accounts and this one from Santander UK looks too good to be true, so I think I'm not understanding it right. Santander 1-2-3 ...
19
votes
4answers
14k views

Why would anyone buy a government bond?

In my country, the interest rates on government bonds are currently 2 - 3%, but I have money in a term deposit at the bank which earns 4% interest. I don't understand how this can be possible. Why are ...
19
votes
2answers
2k views

How would bonds fare if interest rates rose?

The first thing I learned about bonds is that when interest rates rise, the price of existing bonds tends to fall. Unfortunately, I didn't learn much else about bonds. So I have a couple questions ...
18
votes
6answers
3k views

What are the advantages of paying off a mortgage quickly?

What are the advantages of paying off the mortgage quickly?? Sure, not paying interest and truly owning your house is great, but then the money is tied in a fixed asset, and if you want to get at ...
17
votes
9answers
9k views

Is my back-of-the-envelope calculation about taking out a loan to invest into the markets flawed?

With the recent economic struggles due to the Covid-19 pandemic the stock market seems to be even more interesting for personal investments. Taking out a loan might be one of the ways to gather or ...
17
votes
1answer
3k views

Did Greece really issue bonds to investors yielding 42% interest?

I read this in the news regarding Greece's financial crisis: The country’s 10-year bond yield fell 11 basis points to 8.04 percent at 12:26 p.m. in Athens today. While that’s down from a record ...
16
votes
7answers
3k views

Why would a car company lend me money at a very low interest rate?

Why would a car company lend me money at 1-2% when they could lend it to the federal government at ~2.9% with zero risk?
16
votes
1answer
5k views

What does a mortgage percentage rate really mean?

I'm wondering if I could get a detailed explanation on exactly what a mortgage rate really means. For example, if you have a $250,000 mortgage, with a 25 year amortization, at 2.95%, with a 5 year ...
15
votes
3answers
2k views

Are lower interest rates bad for the lending perspective of banks?

I know that in times of lower interest rates borrowing from the bank is an easier task at least because its cheaper. However I am not yet convinced why a textbook source is stating that lower interest ...
15
votes
3answers
56k views

Calculate Future Value with Recurring Deposits

I am familiar with the formula for calculating FV and compound interest of a deposit, but I am wondering if there is a formula that will allow me to calculate how much money I will have after ...
14
votes
4answers
4k views

How can bonds reach 0 and negative interest rates? why would someone buy them? [duplicate]

I know what coupon rate and yield to maturity is but I do not understand very well the interest rate of 0.07% in 1 year Treasury bonds, for example. And how can bonds reach 0 and negative interest ...
14
votes
4answers
316 views

For an investor, what's the appropriate response to the U.S. Debt downgrade?

So the S&P has downgraded United States debt from it's AAA status. There have been other threads discussing why/when a downgrade will happen, as well as possibility of default. Instead, I want to ...
14
votes
4answers
3k views

Can someone help me understand my student loans?

I have more loans than these but I am wondering how to handle these three (all with the same bank): 3%, last payment ~$36, current balance $6153, original amount $5500, payoff balance $6170 2.5%, ...
14
votes
3answers
462 views

Is it worth it to use "balance transfer" credit cards, to take advantage of low-rate offered as sign-up incentives?

I'm attracted by the low interest, but scared of having too many credit cards and losing track of payments, or worse, adversely-affecting my credit rating or future borrowing potential by having "too ...
13
votes
3answers
13k views

Downside to temporarily lowering interest rates?

American Express sent me a promotional offer to lower the interest rate on my credit card for 12 months. I don't carry a balance on any credit cards. I can't think of a good reason to accept this ...
13
votes
3answers
3k views

Interest rates on fixed deposits in India: Why would rates for 1 year deposits be higher than for 2 years?

Currently, in India, banks are offering very high rates on Fixed Deposits (FD). What I am curious about is that the rate is often higher for a 1 yr lock in period than a 2 yr lock in period. I would ...
13
votes
2answers
795 views

Why does the currency carry trade work?

I understand the carry trade mechanism, but I wonder why it works, or why it doesn't work. Each currency has an interest rate associated with it. The Yen (JPY) has historically had a very low ...
12
votes
7answers
766 views

Are Kiva or other microlending institutions a decent way to improve overall yield?

Have you used Kiva.org, Microplace.com or any other microlending institutions? Any positive or negative experiences? Does this seem like a decent way to improve overall yield, assuming I'm willing ...
12
votes
2answers
2k views

Bank of the Sierra: Are they legit? How can the checking interest APY be so high?

As of February 8th, 2009, Bank Of The Sierra offers a free checking account which earns a 4.09% APY. It looks like the catch is that you pretty much have to use them as your main bank. You need to ...
12
votes
9answers
6k views

Are variable rate loans ever a good idea?

For nearly every major credit account I have, or have applied for, the option of fixed vs variable rates are always presented. I've always, almost without even considering, chosen the fixed rate. Is ...
12
votes
3answers
502 views

Why did one-year notes pay more than 10-year notes during the 1980's crisis?

Why did one-year notes pay more than 10-year notes during the 1980's crisis? During the early 1980's, one-year T notes paid more than the 10-year T note, which implies that nobody wanted to buy the ...
12
votes
3answers
299 views

What exactly is the interest rate that the Fed is going to adjust?

Lately, the financial press talks non-stop about the Fed doing this and that to the interest rate. What exactly is this interest rate that the financial press is talking about? Why is this Fed ...
12
votes
1answer
9k views

What is the difference between Interest Rate and APY?

What is the difference between Interest Rate and APY on savings accounts, CDs, etc? Is there a simple formula to convert the two?
11
votes
5answers
2k views

What is the best way to stay risk neutral when buying a house with a mortgage?

I'm looking to buy a property. I do not want to take a risk on this property. Its sole purpose is to provide me with a place to live. How would I go about hedging against increasing interest rates, to ...
11
votes
3answers
3k views

When people say 'Interest rates are at all time low!" ... Which interest rate are they actually referring to?

When we talk of 'rising interest rates' or 'falling interest rates', which interest rates are we referring to? - The interest given to the individual by the bank on a savings account? - The interest ...
11
votes
3answers
3k views

Why is deposit interest rate in the same currency different from country to country? [duplicate]

My bank offers 11% interest rate for 1-year deposit in USD. This is similar to what other Ukrainian banks offer but much higher in comparison with our neighboring countries, Belarus (3.5%) and Poland (...
10
votes
6answers
6k views

Why making additional payment to mortgage counts towards principal? Why does it matter?

When it comes to mortgage advice, some people recommend making an extra payment. The logic is :"These extra payments are automatically applied to your principal, not interest". Why does it matter if ...
10
votes
5answers
16k views

Why do 10 year Treasury bond yields affect mortgage interest rates?

Why is it that when the yield on a Treasury bond increases (because people are selling their bonds, I believe), mortgage rates increase as well? Is there any sort of inherent connection between them? ...
10
votes
2answers
770 views

How does Paying credit card in full VS paying with interest will affect your credit score?

What is the effect of paying credit card in full or with interest on your credit score?
9
votes
3answers
3k views

"Simple interest rate of 0.10%" corresponds to "APY of 2.54%-5.00%"... how?

This checking account says Balances above $5,000 earn a simple interest rate of 0.10%, with a corresponding APY of 2.54%-5.00% APY. I don't understand how a simple interest rate that is a fixed ...
9
votes
8answers
2k views

Is ING Direct Orange Savings a decent online savings account?

I'm looking for a good savings account that's 100% online and provides a good interest rate. I saw ING Direct (http://home.ingdirect.com/products/products.asp?s=OrangeSavingsAccount) and it this ...
9
votes
3answers
6k views

Can I charge interest on money that I have lent out, even though I am not a financial institution?

On the news a couple of years ago, in BC, they said that if you are NOT an financial institution, it was illegal to charge interest on any money that you have lent out. Now I live in Alberta. And ...
9
votes
1answer
2k views

Yield on municipal bonds versus treasury

I'm looking right now at the yields in Municipal bonds and Treasury bonds on Bloomberg: https://www.bloomberg.com/markets/rates-bonds/government-bonds/us and I see that yields on Municipal bonds are ...
9
votes
4answers
404 views

How do you get a lower interest rate on your credit card?

I have a credit card that I am currently paying 14.24% interest on a balance. I'm working on paying the balance off. In the meantime, what's the best way to lower the interest I'm paying on the ...
9
votes
2answers
39k views

What are libor swap rates?

In the Wall Street Journal there is a list of money rate benchmarks. One of them is LIBOR swaps (USD), whose description is LIBOR swaps are mid-market, semi-anual swap rates and pay the floating 3-...

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