Interest rates come from a variety of sectors, and they are derived from the baseline rate that comes from the treasury. Discover why high degrees of risk result in high interest rates with help from a registered financial consultant in this free video on money management and personal finance.
This is financial adviser Patrick Munro, talking about the different types of interest rates. Interest rates of course, come from a wide variety of sectors, based on the different types of borrowing that are involved. Interest rates are derived from baseline rate, that comes from the treasury, and then banks will mark up to the bank lending rate, and then depending on the bank, and your credit as a consumer, they will decide how much an interest rate, that you will pay. The interest rate is also based on the security, in other words, what you're buying. Are you buying a house? Are you buying a car? Are you making a business loan, or a venture capital loan, to start a new business? Those are degrees of risk, and the higher the degree of risk, the higher the interest rate. You can mitigate that by having great credit, and keeping your credit score as high as possible, and the bank will look at that, in a favorable light, and therefore, charge you less in interest. This is Patrick Munro, talking about the different types of interest rates.