What is the Full Form of INT in Banking?
Thе Full Form of INT in Banking is Interest. Interest in banking is defined as the cost of borrowing or a reward for saving. It refers to what a bank charges on the amount it lends to a borrower. On the contrary, every time a customer deposits money into a savings account or makes fixed deposits, the bank will, in turn, give interest to him or her for keeping the money. One of the more common ways to express interest rates is through an Annual Percentage Rate, or APR, which impacts the amount paid or gained in a period of time. The APR is the total cost of your loan for 12 months. It comprises standard fees and interest you are expected to pay.
Understanding Loan Interest Rate
Interest rates on loans are the costs related to the loan that one borrows from a financial institution. When one takes a loan, he /she promises to give back the amount borrowed plus an additional amount, known as interest, which is based on a certain percentage of the money borrowed. The interest rate can be fixed during the tenure of the loan or may vary depending on the prevailing conditions in the market. Knowing the interest rate is important since this mpacts the final sum to be repaid. Further, this will have implications for financial planning and budgeting, and the borrower can make well-informed decisions related to his/her finances.
Benefits of Earning Interest on Deposits
Interest on savings encourages customers (depositors) to deposit money. Savings accounts pay interest to depositors annually, increasing their savings amount over time. High interest rates allow financial stability and long-term planning. Fixed deposits, otherwise known as FDs, assure customers/depositors a safe way to increase savings with a fixed interest rate over a fixed tenure. Fixed deposits have better returns compared to standard savings accounts; hence, they are perfect for conservative investors. The guarantee of returns and steady income that an FD will provide helps in financial planning and achieving financial goals.
