Bank Rates Key Terms

Gain a more in-depth education about the concepts affecting your bank account rates

By Christine Foley

Does your business keep money in a bank? Probably. As a result, it is important to understand what your bank is doing for you and what is required of you at your bank. Bank rates are put in place with every account, and even seemingly minor bank rate fluctuations can cause drastic results when it comes to the bottom financial line of your business. Navigating banking systems can be properly performed only when the bank and its accounts are understood, as well as how they are affected by bank rates. In order to understand bank rates, you need to understand the following key terms.

Base interest rates

Base interest rates refer to the very minimal amount that would be accepted or considered by investors when investing in non-treasury securities. In many cases, the base interest rates are associated with other interest rates offered on comparable treasury securities. Interest rates can fluctuate, so base interest rates are also known to vary quickly.
Try: WiseGeek.com explores the specifics of exactly what a base interest rate is.

Monthly fees

Monthly fees are charged by the bank in order to conduct basic ongoing bank objectives. They are also referred to as maintenance fees, and allow the bank the finances to conduct the tasks they deem necessary and proper.
Try: At WSJ.com, the retraction of Chase's unpopular monthly fees are explored.

Certificates of deposit

Certificates of deposit, also referred to as CDs, are time deposits. Some of the establishments that offer CDs include banks, thrift institutions and credit unions. These certificates of deposit are insured and considered to be relatively risk-free.
Try: SEC.gov goes through the basics of certificates of deposit.

Money market account

Money market accounts are offered by banks and credit unions. They are a type of savings account that works much like savings accounts, except that they pay higher interest and often have higher minimum-balance requirements.
Try: To learn how money market accounts work, visit HowStuffWorks.com.

Line of credit

Any credit facility that's been extended or offered to a business by any type of financial institution, such as a bank, is known as a line of credit. A line of credit can come in several different forms. These forms may include cash credit, overdraft, demand loans, export packing credit, term loans and similar options.
Try: Investopedia.com explains the basics of a line of credit.

Libor rates

LIBOR, an acronym for the London InterBank Offered Rate, is the interest rate that will be charged by certain banks for loans of one, three, six and 12 months. LIBOR rates are charged by London banks, but then utilized as the benchmark for banks that are located and established all over the world.
Try: LIBOR rates are explained at USEconomy.About.com.