What are they?
A Bank Bill is an unconditional order by one party to pay a fixed sum - the face value of the bill - at a fixed time to a bank.
Bank Bills are linked to the Credit Provider's cost of funds. Specifically, your loan will have a "margin" above the Bank Bill Swap Bid Rate ("BBSY") interest rate at which the funding is sourced.
Your customer margin is determined by the size of your loan and the overall risk of your application. Your interest rate is rolled over every 30, 60, 90 or 180 days and at each rollover your interest rate is reset to the current cost of funds plus your margin.
Key Highlights
- Interest is paid in Advance.
- Rates are set by the market (supply and demand) and move at the whim of the market.
- Variable rates are reset every day and are published in the Financial Review.
- Interest can be paid monthly, quarterly or semi-annually.