What is the interest rate hike method? What is the formula for calculating the rate hike method?

The interest rate hike method is the interest collection method used by banks when issuing loans that are repaid in equal installments.

In the case of repayment of the loan in equal instalments, the bank will pay the nominal interest rate.

The calculated interest is added to the principal of the loan, and the sum of the principal and interest of the loan is calculated, and the enterprise is required to repay the sum of the principal and interest in installments during the loan period. As the loan is repaid in equal installments, the borrower actually uses only half of the loan principal on average while paying the full amount of interest. In this way, the real interest rate borne by the business.

This is about 1 times higher than the nominal interest rate.

The meaning of this formula is that the annual interest amount is the average annual possession of the borrowing and the effective interest rate ?? That's the approximation algorithm, right? The time value of interest is not taken into account.

It can be understood in this way, you have a loan of 1 million, but from the next month of your loan, you have to start to repay the principal and interest in installments, assuming that your loan is one year, the principal you repay in the first month is actually not used for 1 year, but used for 1 month to repay the bank, and so on, your average use of the annual loan principal is only (0 + 100) 2 = 500,000, and your interest does have to pay 100,000, so 10 50 = 20% is the effective interest rate.

The reason for raising interest rates to curb inflation is that the amount of money in circulation in the market is reduced, which indirectly suppresses inflation. The interest rate hike is simply to raise the interest rate, and the effect of the interest rate hike will directly reduce the first round of money**, encourage deposits, suppress consumption, reduce market investment, etc. Inflation means that the money in the market has exceeded our actual needs, and the money will become less and less valuable.

The disadvantages of inflation can directly bring the disaster of making ends meet for workers and peasants, and for public officials, salaries cannot increase according to the degree of prices, goods do not stop, and money purchases are constantly falling.

The bank interest rate hike will allow more customers to deposit their money in the bank and generate more interest, so in this way, everyone's money in their hands will decrease, consumption will decline, and the currency circulating in the market will directly decrease.

In addition, bank interest rate hikes will weaken corporate loans, because after the interest rate hike, the interest rate on bank loans will also increase, increasing investment costs and forcing companies to find ways to reduce costs, so there will be fewer applications for corporate loans, and then less money will be circulating in the market.

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