Money Rates

2008-12-06T07:31:00.000-08:00

Money rates refer to interest rates charged by commercial banks for the benefit of their creditworthy customers. Money rates can also be described as rates that are paid by premier companies to banks in order to obtain funds.
The different types of money rates include short term money rates, long term money rates, home equity-fixed rates, home equity-variable rates etc. Each bank, building society or specialist loans company sets their own money rates. Money rates also change according to different lending products. Almost all banks change the money rates every 3 months or 6 months.
Some issuers of credit cards use money rates to calculate interest. Money rates is an economic indicator used by credit companies to determine the interest rate charged on their variable rate credit cards. The changes in fixed rate mortgage do not affect the money rate. Interest rates are indirectly correlated to the money rates.
First time borrowers are provided loans with discounted current money rates and therefore most first time loans are offered below.
Increase in the value of bonds will also increase the rate of lending. Sometimes, banks increase the rate of money rates when the cost of obtaining funds increases. Sometimes banks offer rates below the present money rates in order to attract new customers.
Money rates are affected by federal fund rates. These rates vary with the availability of funds in the banks and the demand for credit in the market