no matter how other interest rates fluctuate. This can be an advantage if you get a very low fixed interest rate. However, if the interest rate goes down, you may also end up with paying more interest then you should have paid since your interest rate is fixed.
The other kind of interest rate is the balloon rate. Contrary to the fixed rate, your interest rate will fluctuate with the other interest rates. You may think this is not good since you will need to pay more interest if the rate goes up. However, there are always two sides of a coin. This can be an advantage too! It is because you will need to pay less interest if the rate goes down.
As mentioned, the most common thing in finance you may encounter is the credit card. Most people will have at least one card. When you purchase with your card, the company which issues the card, usually the bank, will pay on behalf of you. To this end it is just like a loan. However, if you can fully repay within the grace period, they will not charge you any interest. On the contrary, if you only pay the minimum, they will start charge you the interest. So be careful of this when you are purchasing with your credit cards!
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