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Interest Rate
A percentage of a loan or deposit balance that is charged by a lender or financial institution for the use of its money.
More Details
An interest rate is the cost of borrowing money or the return on an investment, expressed as a percentage of the principal (the amount borrowed or invested).
Example
If you have a credit card, you may be charged interest on your unpaid balances. The interest rate on your credit card will be listed in your credit card agreement and may vary based on your credit score and the type of card you have.
Related Terms
Refinance
The process of paying off an existing loan with a new loan, typically in order to obtain a lower interest rate or to change the terms of the loan.
Adjustable Rate Mortgage (ARM)
A home loan with an interest rate that is fixed for a certain period, after which it may fluctuate with the market.
Minimum Payment
The smallest amount of money owed on a balance to remain in good standing.

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