I'm not implying I know *what* the catch is, it's just that I deeply know that deterministic interest rate bets are just as doomed to arbitrage as deterministic stock bets used to be. It's just a feeling that I'd like to express in plain figures but for now, I can't. Until then, think trading options instead of the plain stock. (Swaps as a derivative over interest rate compared to plain interest rate). It's a form of insurance where option traders pay or are payed by stock traders, and in-between are us: the arbitrageurs. Don't know enough on swaps and frankly don't care, but what I know tells me this is a crooked game if you don't know where you're standing.
Again, I wanna reiterate: this is just my personal, independent, qvasi-risk-free idea. If you really want risk-free then buy IBM.
IMO: The OP is merely removing error from his calculations (reduction of "Garbage In"). Suggestions to increase error by using improper inputs to BSM or ignore it suggest lack of understanding.
In a prior post here, part of my statement included: " To calculate would be overly complicating it, ..." That was a poor choice of wording. Should be: use the method that provides results most closely matching the actual option pricing. If using available interest rate time increments is best fit, use that (simpler) if using interpolated time values for interest rate is better fit, then by all means use that. It is trivial to do, but should insure, if possible, it will more correctly reflect actual option pricing. Since I do not have the answer, I chose the simple method until I discover otherwise. I did not want to increase my error by assuming interpolated interest rates were more accurate for option pricing with BSM.