Banking matters Activity A. Current accounts

Activity 3.Name the interest rates and loans. Then put them in order, from the lowest rate to the highest. Look at В section to help you.
a mortgages a loan to buy property (a house, flat, etc.).
b leasing borrowing money to buy something like a car, spreading payment over 36 months.
с creditworthy: commercial banks' lending rate for their most secure customers.
d overdrafts occasionally borrowing money by spending more than you have in the bank.
e discount rate the rate at which central banks make secured loans to commercial banks.

1

2

3

4

5

Lowest highest
Activity 4.Are the following statements true or false? Find reasons for your answers in A and В sections.

1. 
   All interest rates are set by central banks. False
   
2. 
   When interest rates fall, people tend to spend and borrow more. True
   
3. 
   A borrower who is very solvent will pay a very high interest rate. False
   
4. 
   Loans are usually cheaper if they are guaranteed by some form of security or collateral. True
   
5. 
   If banks make loans to customers with a lower level of solvency, they can increase their margins. True
   
6. 
   One of the causes of changes in interest rates is the supply and demand for money. True
   

Discussion
What are the average interest rates paid to depositors by banks in your country? How much do borrowers have to pay for loans, overdrafts, mortgages and credit card debits? Is there much difference among competing banks?
In my country average interest rate is estimated as 24 percent. For example, for a loan like mortgage interest rate is valued as 18 percent. But for credit cards it is estimated as from 28 percent to 36 percent based on consumer`s credit history.