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Topic 8 - Coggle Diagram
Topic 8
There are 2 types of interest rate, what are they?
Fixed Rate
When the bank ensures that you will earn the same interest rate on saving or borrowing, regardless of the bank's situation.
Variable Rate
When the interest you earn on saving and borrowing is dependant on the bank rate. This means the interest you earn can fluctuate (change).
What is APR, AER and EAR?
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EAR - Equivalent Annual Rate is the amount of money you would have to pay on overdraft (when you withdraw money from the bank even when you have none left in your bank account) for 1 year.
APR - Annual Percentage Rate is the amount of money you would have to pay on borrowing for over 1 year.
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