DEFINITION of 'Ceiling'

The maximum level permissible in a financial transaction. Ceiling refers to the highest price, the maximum interest rate, or the largest of some other factor involved in a transaction. For example, the interest rate ceiling on a credit card is the highest interest rate that could be charged for purchases, cash advances, penalty APR, etc. An adjustable rate mortgage (ARM) might include an interest rate ceiling; the maximum interest that the mortgagor would be allowed to pay.

BREAKING DOWN 'Ceiling'

Ceilings are intended to keep prices, interest rates, rents, charges, debts and other financial transactions under certain levels. Examples include bond issuers who may cap the amount of interest they would be willing to pay; investors who attach a price ceiling or limit to a position order; maximum rents allowable for certain properties; or debt ceilings, the amount of debt above which an entity can no longer borrow, as issued by local, state or federal governments.

RELATED TERMS
  1. Price Ceiling

    The maximum price a seller is allowed to charge for a product ...
  2. Debt Ceiling

    The maximum amount of monies the United States can borrow. The ...
  3. 2011 U.S. Debt Ceiling Crisis

    A contentious July 2011 debate regarding the maximum amount of ...
  4. Interest Rate Collar

    An investment strategy that uses derivatives to hedge an investor's ...
  5. Rent Ceiling

    A maximum price a landlord is allowed to charge for rent. Rent ...
  6. Interest Rate Ceiling

    The maximum interest rate that a financial institution can charge ...
Related Articles
  1. Insights

    What's a Price Ceiling?

    A price ceiling is the maximum amount a seller can charge for a product or service.
  2. Personal Finance

    Should Congress Raise The Debt Ceiling?

    Some members of Congress say the debt ceiling must be raised while others insist it's time Uncle Sam learned how to get by without any more borrowing. We'll look at the issues at stake.
  3. Insights

    Understanding The Debt Ceiling

    What does it mean when the U.S. government raises the debt ceiling? What purpose does it serve and what risks are involved raising it?
  4. Personal Finance

    Everything You Need To Know About Credit Card Rates

    Understanding credit card rates will help you choose the right credit card, and avoid any unpleasant surprises.
  5. Personal Finance

    Electrifying Apartment Bills: How To Reduce Them

    As a renter, there are still factors that can influence your heating and air conditioning bill.
  6. Managing Wealth

    Managing Interest Rate Risk

    Learn which tools you need to manage the risk that comes with changing rates.
  7. Financial Advisor

    Implications of the Federal Reserve's Impending Rate Hike

    The Federal Reserve begins its two-day meeting on Wednesday, September 16, and everyone is watching to see if the central bank will raise the United States target interest rate for the first ...
  8. Personal Finance

    How To Read Loan And Credit Card Agreements

    The devil is always in the details! Find out what you're signing yourself up for.
  9. Personal Finance

    Credit Card Debt: America’s Biggest Struggle?

    Dealing with credit card debt is a huge struggle for many American families. Here are some tips to get you started.
  10. Investing

    Forces Behind Interest Rates

    Interest is a cost for one party, and income for another. Regardless of the perspective, interest rates are always changing.
RELATED FAQS
  1. How does interest work on a cash advance from my credit card?

    Find out how cash advances and regular credit card purchases are treated differently and what it means for your financial ... Read Answer >>
  2. What's the difference between a balance transfer and a cash advance?

    Learn how balance transfers and cash advances differ, how these transactions can both benefit and hurt your finances, and ... Read Answer >>
  3. Do lenders offer floating APRs?

    Learn about credit cards with floating, variable and fixed APRs. Explore introductory rates offered by two leading credit ... Read Answer >>
Trading Center