The interest is what you pay a bank to lend you money or what the bank pays you when you deposit your savings.
Understanding the basics of interest rates and how they work will help you work out how much a loan is going to cost or how much you will earn on a deposit.
The nominal interest rate (NIR) and the Annual Percentage Rate (APR)
The nominal rate of interest is what the bank charges for loans or pays on deposits. The APR is the nominal interest plus any associated fees and expenses, so as to give a measure of the real cost or return.
Benchmark rates and other commonly usedrates
There are certain official and public interest rates that are used as a reference to calculate the interest on various financial transactions, particularly in the mortgage market.
- Official mortgage market reference rates
- Table of official mortgage market reference rates
- Benchmark rates applicable when calculating the market value to compensate for interest rate risk
- Table of benchmark rates applicable when calculating market value to compensate for interest rate risk
- Public benchmark and statutory interest rates
- Table of statutory interest rate
- Rates applied to unarranged overdrafts and credit facility over-limits
- Table of late-payment interest rates
- European Central Bank interest rates
- Table of late payment interest rates for commercial transactions
Interest rates applied by credit institutions
Banks are free to set their own interest rates. However, for statistical purposes, they are obliged to inform the Banco de España of their lending and borrowing rates.