Practicing Success
What is the difference between the interest rate that a bank charges a borrower and the interest rate a bank pays a depositor knwon as? |
Bank spread Bank rate Bank finance rate None of the above |
Bank spread |
Bank spread is the difference between the interest rate that a bank charges a borrower and the interest rate a bank pays a depositor. Also called the net interest spread, the bank spread is a percentage that tells someone how much money the bank earns versus how much it gives out. Banks charge a higher interest rate on loans than what they offer on deposits. The difference between what is charged from borrowers and what is paid to depositors i.e. bank spread is their main source of income. |