BANKING AFFAIRS

Detailed explanation-1: -What Is Cheap Money? Cheap money is a loan or credit with a low interest rate or the setting of low interest rates by a central bank like the Federal Reserve. Cheap money is money that can be borrowed with a very low interest rate or price for borrowing.

Detailed explanation-2: -Meaning of cheap money in English money that can be borrowed at a low rate of interest: The boom was fueled in large part by cheap money and easy credit. Compare.

Detailed explanation-3: -Cheap credit means more income would be left with the borrower to reinvest rather than return as interest. This leads to acceleration of economic activity. Cheap credit would also allow weaker sections of society to enter formal sector of lending and rid them of exploitation at the hands of informal moneylenders.

Detailed explanation-4: -Dear money is often referred to as tight money because it occurs in periods when central banks are tightening monetary policy. It may be contrasted with loose or “cheap” money.

Detailed explanation-5: -A low interest rate or APR (annual percentage rate) means you’re paying less for the privilege of borrowing over time. High interest rates are only good when you’re the lender. But that is technically what happens when you put your money in a savings account, checking account, CD or money market account.