What are the different types of commercial banking credits?

Commercial banks are profitable institutions that provide products to enterprises and consumers. The account options differ between banks, but commercial banking loans usually include fixed rate loans and variable rates. In addition, many banks offer both term loans and open credit products.

Long -term fixed -rate loans provide banks permanent and predictable source of income. Many types of mortgages and vehicles have fixed interest, which means that monthly loans of the debtor remain unchanged during the credit period. Fixed loans for homes often have conditions that last between five and 30 years. Credit conditions for vehicles are usually limited between five and 10 years to ensure that the loan time does not exceed the life of the vehicle. Loans with variable rates

are commercial banking loans products that usually monitor index movements, such as the United States, or London interbank rate (Libor). InfluenceThey usually reset on variable products monthly or annually. Banks generally set the client rate by determining a loan for a certain margin over the index. If the index rate increases by one percentage point, the interest rate on the loan will increase by the same margin.

Some fixed term loans, including a mortgage, have variable interest rates. In many cases, these commercial banking products only start with an initial interest, which can last up to 10 years. At the end of this semester, the bank calculates the outstanding main and interest balance. The loan is converted to a fixed -rate product for the remaining part of the period and monthly payments are structured so that the entire balance is paid to the end of the loan period. In other cases, debtors pay variable interest rates for the entire credit term and then make a single balloon payment to pay off the loan when the loan term ends.

Credit cards of commercial banks are neavaSastened loans that usually have open conditions. Clients have access to the revolving credit line from which they can draw at any time. Debtors only make payments on the basis of an outstanding credit card balance. Card holders can repay the outstanding balance and then reuse the credit line at the future date. Some banks evaluate monthly and annual card fees, while other banks simply generate revenue by billing credit card interest.

There are many commercial banking credit options for small and large businesses. These include business credit cards, unsecured lines of own capital and commercial term loans. In some countries, the national government guarantees some commercial loans to encourage banks to lend novice businesses, especially those in industries where a large number of businesses fail in the first few years. Similarly, some commercial banking loans for consumers such as mortgages are sometimes InsuredGovernment, which means that creditors assume a lower level of risk when issuing these loans.