0
Moon7296 Posted 16 years ago
Vocabulary

Interest rates vs interest points

I heard words "interest points" in the context of banks in BBC world news radio.

Does this two sound different ? "interest rates vs interest points"
  

Top answer

Hi moon, and welcome to English Forums! A point is 1% of the amount of the loan, paid as a lump sum. It can be added to the principle of the loan or paid separately.

— BarbaraPA

  • Hi moon, and welcome to English Forums!
  • A point is 1% of the amount of the loan, paid as a lump sum.
  • It can be added to the principle of the loan or paid separately.
  • 5 points, you need to pay $2,500 when you sign the loan papers, OR you can have the loan be for $102,500.
  • The interest rate on the loan will be 6%.
Free · every Monday

Get the Weekly English Kit 📬

New words, one handy idiom, and a 2-minute quiz — delivered to your inbox to keep your streak alive.

2 Answers
0
Hi moon, and welcome to English Forums!

A point is 1% of the amount of the loan, paid as a lump sum. It can be added to the principle of the loan or paid separately.

If you borrow $100,000 at 6% and with 2.5 points, you need to pay $2,500 when you sign the loan papers, OR you can have the loan be for $102,500. The interest rate on the loan will be 6%.
0
0
To me, in the context of interest rates, a "point" is 1%, or (in the financial markets, and called in full a "basis point") 0.01%. It's used when describing changes in rates or spreads (differences) between rates (e.g. "up five points" might mean "up 0.05%").


I have a suspicion that GG's more specific explanation may be of a US usage of the term, and that, since this is the BBC, it
0

Related Questions