How to Figure Out Bank Interest Rates

If you are borrowing money to purchase a vehicle or a home or you just want to save money for a rainy day, it is important that you know how interest works. If you are saving money, you must receive the highest interest rate possible since this adds more money in your pocket. If you are borrowing money, you need a lower interest rate, which means you are paying out less money per month.

1. Purchase a newspaper related to financing, e.g. the Wall Street Journal. The Wall Street Journal and other financial newspapers have their own section that has a list of interest rates, such as bank notes and Treasury bill. Search for vital information on interest rates, such as a rate called the Federal Reserve funds rate. The Federal Reserve funds rate finances everything including mortgages, money market funds, car loans and credit cards. 


2. Analyze a copy of a current bank statement or credit card statement. Review the section that has a list of interest rates. Check to see if your credit card interest rate is variable. If it is variable, it is part of the Federal Reserve funds rate. For example, your interest rate on your credit card may list a Federal Reserve rate of +15, meaning that the interest rate is 15 percent higher than the current interest rate for the Federal Reserve. If the current Federal Reserve rare were 5 percent then the credit card interest rate would be 15 percent. 


3. Review your savings account or money market funds that you own and then review interest rates on your statements. The bank interest rates on these types of financial instruments tend to vary. Many banks offer high promotional rates to draw in new customers. If you were saving money in case of an emergency, it would be wise if you checked your local newspaper for specials on interest rates. Doing this increases your savings, which means you have more money to put away for a rainy day.


4. Go to your local bank or financial institution and get a rate sheet to review the various loans and their pricing. For example, loans charged for new cars are going to have fewer percentage points than an interest rate charged for a user car. 


5. Compare interest rates on loans from various banks, credit unions and other financial institutions. It is essential to compare bank interest rates, especially if you are a borrower or a saver.