# A Guide to Bank Interest Rates

An average savings account earns 0.05% interest each year. The interest rate applies to the amount of money deposited, lent, or borrowed. The total amount of interest owed on a loan depends on the amount of the principal, the interest rate, and the length of time the loan is valid. Below is a guide to interest rates. Read on to find out how to choose the best bank for your needs. Interested in getting a bank interest rate? 아파트담보대출

## Average savings account earns 0.05%

The national average interest rate for savings accounts is 0.05%, but some banks offer higher rates than this. Online banks, for instance, typically offer higher interest rates than brick-and-mortar banks do. Higher interest rates make money grow faster. For example, a $10,000 savings account earning 1.00% APY would earn more than $100 within a year. In contrast, a savings account earning 0.01% APY would earn only a dollar.

## Prime rate

The prime rate of bank interest rate fluctuates throughout the year. It is based on economic changes and factors, such as the coronavirus pandemic, but it may not be available to all borrowers, regardless of the size of their financial institution. This article explains the process behind setting the prime rate and how it impacts your financial situation. The prime rate was last at 3.25% in July of 2020, the lowest level since 2008.

## Federal funds rate

You might be wondering what the Federal funds rate is. In short, it is the interest rate a bank charges to other banks to lend them money. It’s the interest rate they charge other banks to borrow money overnight. Understanding this interest rate can help you understand the economics of interest rates, and when you should expect them to rise. This article will explore the various factors that affect the federal funds rate. Listed below are some of them:

## Net interest rate spread

The net interest rate spread is a bank’s income earned from lending and charging interest to customers. Banks earn income from interest as well as deposits. According to the Bank of America, in 2020 they will earn $2.3 trillion from interest-earning assets and spend $1.6 trillion on interest-bearing liabilities. The net interest rate spread is also called the profit margin, or NIR. It’s an important metric for banks to monitor, as the larger the NIR, the more money they will earn.

## Compounding frequency of savings account interest

The compounding frequency of a savings account interest rate is an important factor to consider when deciding which account to open. Generally, the more often interest is compounded, the more money will be earned in a year. Depending on the type of account you have, interest can be compounded daily, weekly, monthly, or quarterly. The following table explains the different options and how they compare.