PERIODIC RATE Meaning and
Definition
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The term "periodic rate" refers to the interest rate that is charged or applied at specific intervals, typically on a regular basis. It is aptly named "periodic" because it is periodically assessed, typically on a monthly or annual basis.
In finance and banking, the periodic rate is a crucial component used to calculate the interest payable on loans, credit cards, mortgages, and other forms of credit. It represents the percentage of the principal, or the amount borrowed, that will be charged as interest during each specified period.
For example, if a credit card has an annual interest rate of 18%, the periodic rate would be 1.5% per month, assuming the interest is compounded monthly. This means that for each month the credit card holder carries a balance, they will accumulate interest at a rate of 1.5% of their outstanding balance.
The periodic rate is an important concept for borrowers to understand, as it directly affects the cost of borrowing and the total amount of interest that accrues over time. It is also vital for budgeting and financial planning purposes, as individuals and businesses need to factor in the periodic rate to determine their monthly or annual interest expenses.
In summary, the periodic rate is the interest rate that is periodically charged or applied over specific intervals, serving as a critical component in calculating interest expenses and determining the overall cost of borrowing.
Common Misspellings for PERIODIC RATE
- oeriodic rate
- leriodic rate
- -eriodic rate
- 0eriodic rate
- pwriodic rate
- psriodic rate
- pdriodic rate
- prriodic rate
- p4riodic rate
- p3riodic rate
- peeiodic rate
- pediodic rate
- pefiodic rate
- petiodic rate
- pe5iodic rate
- pe4iodic rate
- peruodic rate
- perjodic rate
- perkodic rate
- peroodic rate
Etymology of PERIODIC RATE
The word "periodic" is derived from the Latin word "periodicus", which in turn comes from the Greek word "periódos". "Periódos" combines "peri" meaning "around" or "about" and "hódos" meaning "path" or "way".
The word "rate" has its origins in the Latin word "ratus", which means "reckoned" or "rated". It eventually evolved into the Middle English word "raten" and then "rate" in modern English.
Putting these two together, the term "periodic rate" refers to a rate or interest that is calculated and applied at regular intervals or periods.
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