Definition
Narrowly Defined Effective Rate
Further information
The NDER is the interest rate component of the Annual Percentage Rate (APR), that is, without considering ancillary costs, such as amortization insurance premiums and commissions that compensate for related direct costs, which, if applicable, are part of it.
In other terms, the main difference between the NDER and the nominal interest rate is that the former takes into account the frequency of payments. It is not equivalent for payments to be made monthly as opposed to once a year, for example. In the case of monthly payments, the situation is more costly for the creditor (and therefore, the NDER will be higher than the nominal interest rate for this reason). In the case of annual payments, the NDER and the nominal interest rate will be similar.
General notes to the statistics on interest rates applied by MFIs to euro area residents.
Related concepts
- Annual Percentage Rate of Charge (APRC)
- Interest rates of Monetary Financial Institutions
- Reference interest rate
- Fixed interest rate
- Nominal interest rate
- Variable interest rate
- Interest rate
References
Legal frame
- Regulation (EU) No 1072/2013 of the ECB, 2013/34, on the statistics of interest rates applied by monetary financial institutions.
- Regulation (EU) No 756/2014 of the ECB, 2014/30, on the statistics of interest rates applied by monetary financial institutions.
- Circular 1/2010 de 27 de enero, del Banco de España, a entidades de crédito, sobre estadísticas de los tipos de interés que se aplican a los depósitos y a los créditos frente a los hogares y las sociedades no financieras. (Circular 1/2010 of January 27, from the Banco de España, to credit institutions, on statistics of interest rates applied to deposits and loans to households and non-financial corporations).
- Guideline (EU) 2017/148 of the European Central Bank of 16 December 2016 amending Guideline ECB/2014/15 on monetary and financial statistics (ECB/2016/45).
- Guideline (EU) 2021/830 of the European Central Bank of 26 March 2021 on balance sheet item statistics and interest rate statistics of monetary financial institutions (ECB/2021/11)
- 2014/810/EU: Guideline of the European Central Bank of 4 April 2014 on monetary and financial statistics (recast) (ECB/2014/15).
Links to data tables
Update date: January 2025
