> For the complete documentation index, see [llms.txt](https://docs.xyb.co/llms.txt). Markdown versions of documentation pages are available by appending `.md` to page URLs; this page is available as [Markdown](https://docs.xyb.co/credit/configure-and-create-credit-products/configure-global-settings-for-credit-products/configure-interest-service.md).

# Configure Interest Service

Before assigning interest rates to credit products, you must configure the **Interest Service** to define the base rate structures. This setup enables support for both fixed and variable interest rate strategies aligned with your credit offerings.

### Step 1: Define Variable Interest Rates

Variable interest definitions allow you to reference market-based indices like ESTR, EURIBOR, or LIBOR that are commonly used in floating-rate loan products.

#### Configuration Fields:

* **Currency**\
  Select the currency (e.g., EUR, USD) the rate applies to.
* **Name**\
  Internal identifier for the rate (e.g., `ESTR`, `EURIBOR1W`, `USDLIBOR1M`).
* **Term**\
  Defines the rate’s frequency or maturity:\
  Options include:
  * `1D` (1 Day)
  * `1W` (1 Week)
  * `2W`, `1M`, `3M`, etc.
* **Value Date Modifier**\
  An integer value that shifts the effective date of the interest rate:
  * `0` = same day
  * `-1` = previous day
  * `+1` = next day\
    Useful for aligning with central bank or benchmark publication timelines.
* **Is Enabled**\
  Toggle to activate the rate in live products.

#### Example Setup:

| Currency | Name       | Term | Value Modifier |
| -------- | ---------- | ---- | -------------- |
| EUR      | ESTR       | 1D   | -1             |
| EUR      | EURIBOR1W  | 1W   | -1             |
| USD      | USDLIBOR1M | 1M   | -2             |

> You can configure multiple rates for a single currency to support different product needs (e.g., EURIBOR1W for short-term loans, EURIBOR3M for longer terms).

***

### Step 2: Reference Interest Rates in Credit Products

Once configured, these variable rates can be:

* **Attached to loan products** using the Product Configuration Service
* **Combined with a margin** (spread) to define the final interest rate
* **Updated via API integrations** with market data providers
* Linked with **interest trackers** that now support **automatic termination handling** for more accurate lifecycle management.

***

### Best Practices

* **Limit duplicate names**: Use consistent and descriptive naming for clarity (e.g., `EURIBOR3M` instead of just `3M`).
* **Align rate terms** with repayment frequency (e.g., use a `1M` rate for monthly repayments).
* **Verify value date logic**: Ensure correct modifier values to avoid misalignment in interest calculations.
* **Enable only required rates**: To keep the configuration clean and manageable.

***

Once configured, variable interest definitions are used in product setup to define rate models (e.g., EURIBOR3M + margin). These are later linked in credit contracts to ensure accurate, dynamic interest calculation based on the selected rate, currency, and term.


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