Interest rate is an indicator in percentage terms that indicates the amount of the loan that the borrower will pay for using the money or the depositor will receive on a bank deposit.
Types of interest rates
There are several types of interest rates. Depending on the term, you can distinguish the annual interest rate, monthly, quarterly. Most often it is said about the rate for the year or the percentage per annum. Other indicators are used extremely rarely, most often in order to conceal the real annual interest rate on a loan.
Depending on the property of the interest rate to change over time, there are fixed and floating rates. The fixed rate is prescribed in the contract, it is stable and does not change under the influence of any external factors. Neither side can reconsider it.
Unlike its counterpart, the floating rate can be periodically revised based on fluctuations in some indicators. For example, some banks increase deposit rates when a certain amount is reached on the account. Another example is metal deposits. In this case, money is invested in precious metals, and the profitability of the deposit depends on changes in prices for them on world markets.
Depending on the time of payment of interest on the loan, there are decursive and anti-sipative rates. The latter is paid at the time the loan is issued, i.e. is advanced by the borrower, practically never occurs in practice.
There are also nominal and real interest rates. The real interest rate, unlike the nominal one, does not include inflation.
From the standpoint of the banking market participants, a distinction is made between the discount interest (refinancing rate), bank interest (credit and deposit rates), and also the interbank interest rate.
The refinancing rate is the most important economic indicator that reflects the percentage at which the Central Bank lends to banks. With its help, the Central Bank regulates the volume of the money supply, the inflation rate, the balance of payments, the exchange rate in the country.
Bank interest is the most common form of loan interest in Russia. The loan interest is formed on the basis of the base rate, the premium for the risk of non-repayment of debt and the credit assessment fee.
Deposit rates are always lower than credit rates by several percentage points. The difference between them is called "interest margin", it forms the bank's profit.
The interbank interest rate operates in the interbank lending market. They are quite volatile and dependent on market conditions.
Interest rates in Russia
The refinancing rate of the Central Bank of the Russian Federation in Russia is 8.25%. It is on it that banks' interest rates on loans and deposits depend. Banks, as a rule, attract deposits at a rate slightly lower than the refinancing rate, and loans at an interest higher than it.
During 2013, the average rate on deposits has been steadily declining. According to the Central Bank of the Russian Federation, in December 2013 it amounted to 6.2% per annum (for up to a year, excluding demand rates), having decreased by almost 1% by the beginning of the year.
The average annual interest rate on loans is much higher. At the end of 2013, it was 23.5%.
