The average savings account rate is a benchmark for the overall rates. But it is not a rate that you should settle for. You should aim for a high yield savings account that has an annual percentage yield (APY) that is more high than the national average. This is because it is easy to find a high-yield savings account that offers a competitive yield and no minimum balance requirement, or a low one.
There are many online banks that have savings rates higher than the national average. The higher the rate, the more savings interest you will earn. Check the collected reviews for online platforms that have great interest rates on savings.
For more information about interest on savings, check reviews about your saving account.
How to measure interest rates:
If you are thinking about taking out a bank loan, it is very important that you first of all know how your interest rate is calculated and understand how to calculate it on your own.
Banks calculate interest rates with various methods, and each method will change the amount of interest you pay. If you know how to calculate interest rates, you will have more knowledge about your loan contract with your bank. You also will be in a better position to negotiate your interest rate.
In measuring interest rates, there is a term called effective rate of interest, it is also called Annual Percentage rate (APR), it’s different from the normal interest rate because of compound interest.
If you borrow $2,000 from a bank for one year and have to pay $120 in interest for that year, your stated interest rate is 0.06%. Here’s the calculation:
Effective Rate on a Simple Interest Loan = Interest/Principal = $120/$2,000 = 0.06%.
1. Credit History
The less credit history you have, the less knowledge a lender has of your repayment ability, possibly making you slightly more risky. The better the payment history, the better the rate.
2. Property Type
A residential house will have a lower interest rate than a commercial farm on 50 acres because of the increased risk that comes with a farm loan. Purchasing a farm or land is different because there aren’t as many properties for value comparison, buyers or people that can afford to.
Will there be other people on the loan, and if so, what does their credit look like? All parties involved in the loan will be used in determining the rate. If the other people on the loan have more credit history, it waves a red flag and increases risk.
4. Payment Frequency
Because of the agriculture industry’s unique nature, if you elect for a payment plan that allows for an annual or semiannual payment rather than a monthly one, you can expect a higher rate.
5. Supply of money
Like any other commodity, if the supply of money increases, all things being equal, the price of money interest rates go down. There are situations wherein the investors do not have attractive avenues and they chase the bonds or deposits. If there is no demand for that money at that moment, then the interest rates go down.