Account Interest Rates

By: EconomyWatch Content   Date: 28 October 2009

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Account interest rates refer to the fees paid by a bank or institution to the depositors on the funds invested in various types of investment schemes or options offered by them. Interest rates are normally expressed as a percentage rate over a period of one year and are decided in accordance with the rules or guidelines set out by the central bank or government of a country. 

Account Interest Rates: Determining Factors

Account interest rates vary with the nature of the account held by an investor and the range of services offered by the bank or the financial institution. The best way to compare the account interest rates and the yield available is to use the compounding method. Although bank checking and saving account interest rates are preferred for the high safety they offer, they are much lower than the money market account interest rates.

 

Types of Accounts and Account Interest Rates

Account interest rates on various types of accounts depict different levels of safety and liquidity.

 

Savings account interest rates are the most popular and well known amongst individual investors. These accounts require the investors to maintain a minimum balance, but there is no upper limit. Account interest rates on such accounts are generally determined by the overall economic conditions and the macro situation. Offshore savings account interest rates vary from the domestic savings account interest rates.

 

Checking account interest rates are lower than the interest rates offered on other types of accounts. This is because checking accounts are ideal for usage for carrying out daily operations rather than keeping one’s savings. Money market account interest rates are usually much higher than those for savings accounts. The minimum balance requirement in such accounts is also quite high.

 

Certificates of deposit interest rates are one of the highest available to the investors. But since they carry high interest rates, they come with several riders that include a specific period of deposit and restrictions on withdrawals. The interest rates on fixed deposits are also determined by the duration and the amount of the deposit.

 

Account interest rates on a particular type of account may, however, vary from bank to bank depending on the overdrawing and other facilities provided and the set transaction limits.

 

 

 


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