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Interest Rate Definition, Examples & Key Insights
Meaning 1：Percentage for saving or borrowing (interest rate)
interest rate
/ˈɪntrɪst reɪt/
n.
It's the percentage amount a bank pays you for saving money, or charges you for borrowing money.
Percentage for saving or borrowing
➕
/pərˈsɛntɪdʒ fɔːr ˈseɪvɪŋ ɔːr ˈbɒroʊɪŋ/
n.
The interest rate is the percentage of principal charged by a lender to a borrower for the use of assets, or paid by a bank to a depositor for keeping money.
📘 Details & Usage
📖 Root Explanation
From Latin 'interesse' (to be between) + 'rata' (fixed portion).
💡 Mnemonic
Picture a bank sign: 'Inter' (between) and 'rate' (ratio) = the cost between your money and theirs.
📖 Example
The interest rate on my savings account is quite low, so I'm thinking of moving my money to a different bank.
The interest rate on my savings account is quite low, so I'm thinking of moving my money to a different bank.
🔗 Collocations
low interest rate – An interest rate that is relatively small
fixed interest rate – An interest rate that does not change over time
annual interest rate – The interest rate applied over a one-year period
🔄 Synonyms
lending rate (n.) – The interest rate charged by banks on loans
borrowing rate (n.) – The interest rate paid by borrowers for a loan
rate of interest (n.) – The percentage charged or paid for the use of money
🌱 Derivatives
interest-bearing (adj.) – Earning or paying interest
interest-free (adj.) – Without interest charges
interest-adjusted (adj.) – Modified to account for interest
📖 Cultural Story
The concept of charging interest on loans dates to ancient Mesopotamia. By the 16th century, 'interest rate' became a standard term in European banking, now a key economic indicator.
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