What does “interest rates”, without any further context, generically refer to?
"In the United States, if someone refers to the ""interest rate"", especially if heard on news or talk radio in particular, they are almost always referring to the federal funds rate, a rate set forth and maintained by the United States Federal Reserve (the ""fed"" for short). If the fed opts to raise or lower this rate, it subsequently effects all interest rates, whether by being directly connected in a chain of loans  or by market demand through the efficiency of financial markets in the case of bond auctions. The FOMC meets eight times each year to determine the target for the federal funds rate.  The federal funds rate effects all interest rates because it is the originating rate of interest on all loans in the chain of loans. Because of this significance as a benchmark for all interest rates, it is the rate most commonly referred to as ""interest rate"" when used alone. That is why other rates are specified by what they actually are; e.g., mortgage rates; 10 year & 30 year (for 10 year treasury and 30 year treasury bond yields respectively); savings rate, auto rate, credit card rate, CD rate—all rates of interest effected by the originating loan that is the federal funds rate.  This is true in the United States but will vary for other countries. In general though, it will almost always refer to the originating rate for all loans in a given country, institution, etc.  Note that bonds have yields that are based on market demand that is, in turn, based on the federal funds rate. It is because of the efficiency of financial markets that the demand, and thus the yields, are correlated to the federal funds rate." The generic representative of interest rates is the 10 year treasury bond rate. (USA). As an approximation most other interest rates do tend to move up and down with the treasury rate, but with more or less sensitivity.  Another prominently discussed interest rate is the short term loan rate established by the Federal Reserve for loans it makes to banks. Generically, interest rates being charged are driven in large part by the central bank's rate and competition tends to keep similar loans priced fairly close to each other. Interest rates being paid are driven by what's needed to get folks to lend you their money (deposit in bank, purchase bonds) so it's again related. There certainly isn't very direct coupling, but in general interest rates of all sorts do tend to swing (very) roughly in the same direction at (very) roughly the same time... so the concept that interest rates of all types are rising or falling at any given moment is a simplification but not wholly unreasonable. If you want to know which interest rates a particular person is citing to back up their claim you really need to ask them. "When ""people say"", each person is referring to whatever he/she is looking at.  Interest rates tend to move roughly the same, but often there is a bias regarding long vs. short term.  In the US right now, short term interest rates are very low but there is a lot of chatter saying they will rise in the future.  The differential between long term rates and short term rates is high compared to historical norms, suggesting that the market believes this chatter.  You can also look at the differences in rates between different quality levels.  If the economy is improving, the difference in rate for lower rated debt vs. higher rated debt decreases as people think the chance of businesses failing is decreasing. Right now, any interest rate you look at is well below long term historical averages, so asserting that interest rates are low is quite safe." It refers to the risk free rate of a particular country. Because all other rates are usually pegged to the risk free rate. In US,it is the 30 day treasury rate. In England, it is the LIBOR In Canada, it is the overnight rate at which banks lend money to each other. All of these come under the category of risk free rate.
"would it make sense to set up multiple bank accounts to avoid going above their thresholds?  Quite possiblly yes but you need to pay attention to the fine print. I don't know what the situation is in poland but in the UK accounts that pay high interest often have strings attached. For example the santander 123 current account pays very good interest but it has an account fee and some other requirements that are difficult to meet if you are not using it as your ""main current account"".  You need to read the terms carefully, if you go over the threshold does the lower rate only apply to money over the threshold? or does it apply to all the money in the account? Are there any other restrictions on how you use the account. Also I don't know if poland has any provisions for limited tax-advantaged savings (like the ISA scheme we have in the UK). If it does then that can add further complications. How to calculate how to maximize the profit here? Well in theory you would get the best account you can and fill it to the threshold. Then the next best account and so-on. You would move any interest paid in an account that was already full to the threshold to the best non-full account (or if the account strongly peanalises going over perhaps move an ammount of money equivilent to the interest just before the interest is paid). In practice that is a lot of work, so if the rates on the different accounts are similar you may want to leave some margin for interest or (in the case of an account that pays the lower rate on the overage while still paying the higher rate on money below the threshold) accepting that some of your money will earn slightly less than idea. Another option some accounts may offer is just to pay the interest to another account, avoiding the need to move it yourself. Finally you should check out your government's limits for compensation in the event of banks going bust. As a general rule you don't want to put more than that ammount in a single bank even if doing so would get you the best interest." You havent signed a contract, so you are only an authorised contact so you have nothing to worry about at all.  Your credit reference can only be affected if you are a signed party on the contract.  I would imagine that they wont remove your details as you may assist them by contacting your emplorer, and effectively chase the debt for them especially if you seem to be family member or a friend of the business owner. How did you find out about the debt, did they phone you?  If you really want peace of mind, you could write to them and confirm that you are not authorised to be contacted by phone or in writing regarding the debt, and that you are not in anyway liable for the debt and that your contact details must be put beyond use, and as you are concerned, say that if they take any further action against you such as affect your credit ref etc then you will take them to 'your' local magistrates court to seek compensation.  Use strong terms and insist they must do what you ask rather than just say that you would like something done etc.  Say that you 'Will' take further action which is generic, and that you 'May' do specific things so that it sounds strong but you haven't have committed to any thing in particular.  This would most likely be more than enough to stop further contact. "negotiability is a legal concept that permits free transfer of a security without the requirement of prior consent of the issuer.  that means the issuer must pay the current holder of the security, irrespective of who he is.  negotiability also protects a good faith buyer of the instrument from adverse ownership claims of purported prior holders of the instrument.  it is not related to ""negotiating"" the price or whatnot.  A negotiable security means the current owner does not have to be concerned about acquiring the asset via a bad chain of title b/c he can always assert that he is a ""holder in due course"" defense against such claims, and have absolute security in his ownership right over the asset.  securities and derivatives are different.  securities are transferrable instruments representing a direct claim on the issuer for the value of the security, whether debt or equity ownership.  derivatives are bilateral contracts, which can only be entered into with the consent of both parties, and can only be transferred by such consent.  derivatives represent a claim against the parties of to the derivative that depends on some economic reference which is outside of the financial condition of the two parties to the contract, such as interest rates, FX rates, commodity prices, etc." It certainly is possible for a run on the bank to drive it into insolvency.  And yes, if the bank makes some bad loans, it can magnify the problem. Generally, this does not happen, though.  Remember that banks usually have lots of customers, and people are depositing money and making mortgage payments every day, so there is usually enough on-hand to cover average banking withdrawl activity, regardless of any bad loans they have outstanding. Banks have lots of historical data to know what the average withdrawl demands are for a given day.  They also have risk models to predict the likelihood of their loans going into default.  A bank will generally use this information to strike a healthy balance between profit-making activity (e.g. issuing loans), and satisfying its account holders. In the event of a major withdrawl demand, there are some protections in place to guard against insolvency. There are regulations that specify a Reserve Requirement.  The bank must keep a certain amount of money on hand, so they can't take huge risks by loaning out too much money all at once.  Regulators can tweak this requirement over time to reflect the current economic situation. If a bank does run into trouble, it can take out a short-term loan.  Either from another bank, or from the central bank (e.g. the US Federal Reserve).  Banks don't want to pay interest on loans any more than you do, so if they are regularly borrowing money, they will adjust thier cash reserves accordingly. If all else fails and the bank can't meet its obligations (e.g. the Fed loan fell through), the bank has an insurance policy to make sure the account holders get paid.  In the US, this is what the FDIC is for.  Worst case, the bank goes under, but your money is safe. These protections have worked pretty well for many decades.  However, during the recent financial crisis, all three of these protections were under heavy strain.  So, one of the things banking regulators did was to put the major banks through stress tests to make sure they could handle several bad financial events without collapsing.  These tests showed that some banks didn't have enough money in reserve.  (Not long after, banks started to increase fees and credit card rates to raise this additional capital.) Keep in mind that if banks were unable to use the deposited money (loan it out, invest it, etc), the current financial landscape would change considerably. The Reserve Bank of Australia's role in monetary policy has three objectives: currency stability (primarily keeping inflation within a narrow band); full employment; and improved prosperity and welfare. Its primary weapon in this, is its setting of a target for the cash rate - the overnight money-market interest rate charged between financial intermediaries. Short-term market rates closely track this cash rate target, because the Reserve Bank controls the supply of funds that banks use to settle the transactions that use the overnight money-market interest rates. Australian capital markets are liquid, with many deposits / loans being on variable-rate or short-term rates; hence changes to the cash rate quickly propagate throughout the market. NB that the changes propagate, but not all interest rates are at the same level: the absolute values don't propagate. Different interest rates will reflect different loan periods, and different (perceptions of) risks. Banks are profit-maximisers. So they won't loan at a lower rate to one borrower, if they can loan the same money to someone else at a higher interest rate (and the same or lower risk). And they won't lend money out, unless they can cover the cost of their own borrowing, plus overheads, plus a reward for the risk of the loan. Hence the home loan rates of all banks will tend to move in the same direction, by broadly the same amount, at the same time. Question is, what is this number 0.01140924 13.69/12=0.01140924 In addition, how does one come out with the EIR as 13.69% pa? When calculating payments, PV = 9800, N=36 (months), PMT=333.47, results in a rate of 1.140924% per period, and rate of 13.69%/yr. No idea how they claim 7.5% In Excel, type =RATE(36,333.47,-9800,0,0) And you will get 1.141% as the result.  36 = #payments, 333.47 = payment per period, -9800 is the principal (negative, remember this) And the zeros are to say the payments are month end, second zero is the guess.  Edit - I saw the loan is from a Singapore bank. It appears they have different rules on the rates they quote. As quid's answer showed the math, here's the bank's offer page -  The EIR is the rate that we, not just US, but most board members, are used to. I thought I'd offer an example using a 30 year mortgage.   Yo can see above, a 6% fixed rate somehow morphs into a 3.86% AR. No offense to the Singapore bankers, but I see little value in this number. What surprises me most, is that I've not seen this before.  What's baffling is when I change a 15yr term the AP drops to less than half. It's still a 6% loan and there's nothing about it that's 2 percent-ish, in my opinion.  Now we know. "&gt;Yes sir, I'm working on compiling your ""precise evidence,"" and I'll have it printed and bound for you on the double.  So you claim there is not competition, then when shown how many banks there are and asked for evidence, your reply is snarky assholism? And you believe ""there is no such thing as a relation between any interest rates and the cost to service the loans""?  I'm becoming convinced you are either ignorant, a troll, or deliberately stupid. Either you have evidence for your claims or you don't.  &gt;rates are artificial  Since the word artificial does not appear on the link you posted, what do you mean by artificial? How can you differentiate between ""artificial rates"" and ""non-artifical"" rates? What do you think the current rates should be?" "I think the issue here is the rules say that ""relevant current events in finance"" are acceptable when (I think) that wording is too loose.   ""Current events in finance"" is just very, very general, and anything related to central banking, monetary or fiscal policy, global austerity, analysis of index movements, sovereign defaults (and speculation thereof) qualifies a ""current events in finance"" - so technically, the rules aren't being broken. I think that having the language tightened a bit would help set the subreddit tone a little more accurately."