This booklet has been prepared solely to facilitate greater public understanding of banking & financial services in the Kingdom of Bahrain. The contents of this booklet do not constitute legal or investment advice and persons in doubt about any matter are encouraged to seek independent professional advice. The BMA shall not be responsible for any loss or other detriment suffered as a result of acting on the information herein.
This booklet explains how interest rates are calculated and the types of interest rates a consumer may encounter when dealing with financial service providers in Bahrain. Knowing about interest rates is important to consumers since it tells them how much it costs to borrow money and how much they can earn by depositing their money with a bank.
Interest rates only apply to loans and deposits from conventional financial institutions. Islamic financial institutions do not charge or pay interest, but have other fees and payments not found in conventional institutions. This booklet looks only at interest rates in conventional banks. There is a Glossary at the back of the booklet explaining some of the commonly used terms.
Contents
What are Interest Rates?
When is an Interest Rate Used?
How are Interest Rates on Loans Set?
Calculating the Cost of Borrowing
Getting the Best Loan Deal
Interest Rates on Deposits
Types of Deposit Accounts
Getting the Best Deposit Deal
Glossary
