Question : What is the difference in fix interest rate and floating interest rate in banking and which one is good?
What is the difference in fix interest rate and floating interest rate in banking and which one is good?
- asked by Shridhar K
All Answers:
Answer #1
they can both have their advantages - but afloater can slice you when the interest comes backupa fixed rate may be a tad higher - but willnever change
- answered by tom4bucs
Answer #2
the word in front defines it.fixed are the onesthat do not change and floating are the ones thatfluctuate go up and down.i think fixed is betterthan floating!
- answered by xeniatsanga1991
Answer #3
Fixed is good because you know what you will bepaying, but floating (or variable) can go up anddown. If the rate goes down fixed is bad becauseyou are paying more than you would do on avariable, but if the rate goes up fixed is goodbecause you are paying less than you would havedone. Also, variable rates may not come down whenthey should, but almost certainly will go up sothey might be bad both ways.With mortgages fixedrates usually only last a short time, after whichyou get transfered to a higher variable rate, soyou have to remortgage to get a better deal again.I did some rough calculations a few years ago anddecided that what I might have saved on a fixedrate was cancelled out by the costs ofremortgaging. In the end the banks will make theirmoney either way! I went for a tracker, which is avariable rate but is guaranteed to go up and downwith the Bank of England rate. My mortgage went uplast year, but has come down this year when manyothers haven't. Overall I think a tracker is thebest option, but you do need enough extra incometo be able to afford it if rates go up severaltimes.
- answered by SimonC
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