This paper focuses on estimation of the term structure using cross sec-tional data. Data consist of Eonia rates, Euribor rates and Finnish govern-ment bond yields from year 2001 to year 2007 and estimation is done pe-riod by period. We use extended Nelson & Siegel model by Svensson (1995) and find that model is suitable for estimation purposes in Finnish environment. In addition we also show that parameters of Nelson & Siegel model are suitable to use in forecasting the term structure of interest rates.