The net interest rate spread is the difference between the interest rate a bank pays to depositors and the interest rate it receives from loans to consumers. The net interest rate spread is instrumental to a bank’s profitability. It can be useful to think of the net interest rate as a profit margin.

What does rate spread mean?

Rate Spread means the positive difference, if any, between (a) the Contract Rate then in effect during the Interest Period in which the conversion of the Contract Rate takes place and (b) the Federal Funds Rate on the day that is two (2) Business Days prior to the first day of such Interest Period.

What does interest rate spread tell you?

Bank spread is the difference between the interest rate that a bank charges a borrower and the interest rate a bank pays a depositor. Also called the net interest spread, the bank spread is a percentage that tells someone how much money the bank earns versus how much it gives out.