Basics of Interest Rates

Basic objective of this article is to discuss Basics of Interest Rates. An interest rate is the rate where interest is paid by the borrower (debtor) for the use of money that they borrow from a lender (creditor). Interest rates targets are a vital tool of monetary policy and are considered when dealing with parameters like investment, inflation and unemployment. This article discuss Interest Rates in terms for deposits and loans; for deposits here explain Nominal or Notional interest rate, Real Interest Rate and Effective Interest Rate. For loans here explain Base Rate and Annual Percentage Rate. Being familiar with these interest rates enables you to settle on educated choices while picking your financial loans and investments.