INTEREST RATE Meaning and
Definition
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Interest rate refers to the percentage at which an entity charges or pays for the use of money. It is the cost of borrowing money or the return earned on an investment or savings. In financial terms, interest rate is expressed as a percentage of the principal amount involved, typically for a specified period, such as annually or monthly.
When an individual borrows money, they are required to pay interest to the lender as compensation for using their funds. Higher interest rates imply that borrowers will have to pay more for the privilege of borrowing money. This is because lenders seek to receive a higher return on their investment due to the increased risk associated with lending.
On the other hand, individuals who lend money or deposit funds into savings accounts receive interest as a reward for allowing others to use their money. Interest rates on savings accounts determine how much individuals can earn on their idle funds.
Interest rates are influenced by various factors including inflation, government policies, and market conditions. Central banks often play a significant role in setting interest rates to manage monetary policy and control economic activity.
Overall, interest rates play a crucial role in the economy by affecting borrowing costs, consumer spending, and investment decisions. They reflect the time value of money by weighing the costs and benefits of borrowing or lending funds.
Common Misspellings for INTEREST RATE
- unterest rate
- jnterest rate
- knterest rate
- onterest rate
- 9nterest rate
- 8nterest rate
- ibterest rate
- imterest rate
- ijterest rate
- ihterest rate
- inrerest rate
- inferest rate
- ingerest rate
- inyerest rate
- in6erest rate
- in5erest rate
- intwrest rate
- intsrest rate
- intdrest rate
Etymology of INTEREST RATE
The word "interest" originated from the Latin word "interesse", which means "to be between" or "to differ". The term "rate" is derived from the Latin word "ratus", meaning "reckoned" or "estimated". Therefore, the word "interest rate" combines these two roots to indicate the estimated difference or reckoning in the amount of money borrowed or deposited.
Similar spelling words for INTEREST RATE
- interest expense,
- interestingly,
- interest-bearing,
- interpretative,
- interior design,
- interesting,
- interiorize,
- interestingness,
- interoceptive,
- internal rhyme,
- interestedness,
- interstratify,
- interpretable,
- interreflection,
- intervertebral,
- interiorise,
- interrelated,
- interpretation,
- interpreted,
- internet site,
- interpretive,
- intertribal,
- interstate,
- intercalate,
- intermittently,
- intermittence,
- intermittency,
- in terms of,
- interest group,
- interrogate,
- interpolate,
- intertrigo,
- interpreter,
- interested,
- intermediate,
- interpenetrate,
- interoceptor,
- interpellate,
- interstellar,
- Intercessor,
- intersperse,
- interrelate,
- internment.
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