blokkikorko

Blokkikorko, a Finnish term, translates to "block interest" or "block rate." It refers to a specific type of interest rate applied to certain financial products, particularly in the context of savings accounts or fixed-term deposits. Unlike variable interest rates that can fluctuate based on market conditions, a blokkikorko is a fixed rate that is set for a predetermined period. This means the interest earned on the deposited amount will remain consistent throughout that defined term, regardless of external economic changes.

The primary benefit of a blokkikorko is predictability. Depositors know exactly how much interest they will earn over the chosen duration, allowing for easier financial planning. This certainty makes it attractive for individuals or entities seeking stable returns on their savings, especially when they have a specific savings goal or timeframe in mind. However, the trade-off for this stability is that if market interest rates rise significantly during the block period, the depositor will not benefit from the higher rates. Conversely, if market rates fall, the blokkikorko remains advantageous. The length of the block period can vary, often ranging from a few months to several years, and typically influences the offered interest rate, with longer terms often commanding slightly higher rates.