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3 April, 12:25

What causes people to have high or low interest rates on credit cards or loans

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  1. 3 April, 14:23
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    Default risk

    Explanation:

    Default risk is the chance of someone failed to pay a loan. The interest is a reward given to an investor. If the default risk high, the investor will be exposed to a higher risk so they ask for more reward. Therefore people with a higher interest rate have higher default risk.

    There are some tools that can determine the default risk of a loan, but mostly it depends on how much the earning of the individual/company and the amount of loan given.
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