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Information on interest rates

The average person will probably find interest rates boring. While most people acknowledge the importance of them, they are rarely interested in the purpose they serve or even what they mean to them. However, interest rates are massively important beyond the average person's savings account, and are actually taken into account when the government deals with issues such as unemployment and inflation.

Interest rates in the past were set by the government, before becoming the responsibility of the Bank of England. There are many things that can influence a change in the interest rate, ranging from politics and inflation, to taxes and investments. Most recently the near-collapse of several of the big named banks caused the interest rates to dip dramatically. Of course, the interest rates for lending, which is the compensation you pay the bank for borrowing money, increased.

Before making an investment it is essential you understand exactly how the interest rates will affect you. While not understanding the rates for a small savings account is not really important, if you are investing your money and hoping for a return it is important you have some grasp on the interest rate concept. This is where the services of a financial adviser or investment adviser are invaluable. They can walk you through the investment process, and help make the different interest rates clearer.

If you are considering applying for a loan or placing money into savings you can ask for free financial advice from your chosen bank. It is their job to help you understand the interest rates, and more importantly how it will affect your finances.

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