A bank rate (also known as a discount rate) is the rate of interest in which a central bank charges on the loans it extends to commercial banks and other financial institutions. These loans or advances are used in order to serve the customers of the commercial banks. The bank rate changes with orders from the central banks. The bank rate is changed to control the supply of money in the system.

The term bank rate is also used by consumers to refer to the interest rate given on a certificate of deposit or a savings account. It is also in reference to mortgages and refinance loans. The three types of bank interest rates are: rate on a certificate of deposit, rate of a credit card, or rate on a loan for an automobile or real estate. Current bank rates are often compared by customers and the customers shop around to try and get the best rate they possibly can. Getting a better rate will lower the overall cost on the money that they borrow from the bank. Customers even shop around for better interest rates on savings accounts so that they can earn more interest annually on their money.

Although the Federal Reserve System is a major influence on all types of bank rates, the rates will still very from state to state. For the savvy consumer, it is best to shop around for interest rates within a region or statewide search. This way, the consumer will know that they are getting the best rate for them. Banking rates will differ based upon the original reason for the loan and the terms under which the loan is signed. The shorter the term of the banking loan, the less interest accumulated over the life of the loan.