WHY INTEREST RATES AFFECT EVERYONE?

Have you ever think about how does the interest rates affect every one of us? No? This article would explain everything you must know about how the affect rates impact each of us. Basically, interest rates affect our every decision related to money and finances. For example, if you want to keep money in your bank account for longer, you will first evaluate the bank’s interest rate. If you want to buy a car on installments, you would first see the interest rates. Similarly, if you are going to rent an apartment for you, you would first check its interest rate. Not only you, but the interest rates affect every single person on this planet. Besides our personal life tasks, the interest rates also impact the companies, organizations and firms in making their business decisions.

Homeowners are deeply affected by the increase or decrease in the interest rates. For example, if you are the owner of your home and interest rates are at their minimum for few months, what would you do? If your house needs renovation, it would be the best time to go for it because lower interest rates means that you would have to pay less money. In comparison, if the interest rates are higher, the homeowners have to pay higher amount of money due to increased interest rate. Therefore, most of the homeowners avoid the renovation process if the interest rates are higher. The kept waiting for the favorable time in order to avoid the extra cost. Not only for renovation of home, but the same can be applied for many other tasks. For example, interest rates affect your decisions for buying a new car, new furniture or machinery for your home.

If you are an investor and interested in buying shares, stocks, bonds, property or any such thing, the interest rates you affect your decision. If the interest rates would be higher, it would be recommended to avoid investing to prevent extra cost. However, when the interest rates decreases, it is advantageous to go for buying the property, stocks, share and bonds. In this way, you can make long-term profits through positively geared decisions.

Similarly, if you are a business owner, the change is interest rate would greatly affect you and your business. You must make your decisions wisely in business and never ignore the potential interest rate before making any transaction. One of the greatest advantage of lower interest rates for a business owner is that they may consider taking business loans if interest rates are lower. However, a company shouldn’t go for taking business loans if there is no intense need for it. Similarly, the overdrafts, leasing a car for company, or starting a new project, etc., are also affected by increased interest rates.

Similarly, the increase and decrease in the interest rates affects our lives completely. In other words, we can say that our lives are completely depending on the interest rates when it comes to finances. No matter who you are, the increase or decrease in the interest rate would have a deep impact on you. However, it cannot be stated that the increase in the interest rates is bad while the decrease in the interest rates is good. The reality is that the increase in the interest rates in good for some people and bad for the others. Similarly, the decrease in the interest rates in good for some people while bad for others. For example, the increase in the interest rates is good for the banks. This is because their profit margins increase when they charge more interest rate from customers.