interest rate

Meaning

An interest rate is the percentage of a loan or deposit balance that is charged or paid by a bank over a specific period. It determines either how much you earn on your savings or how much extra you must pay back on a loan. The tone is neutral and professional.

Examples

• The central bank decided to raise the interest rate to combat inflation.

  The central bank decided to raise the interest rate to combat inflation.

• I am looking for a savings account that offers a high interest rate.

  I am looking for a savings account that offers a high interest rate.

• If you have a fixed interest rate, your mortgage payments won't change.

  If you have a fixed interest rate, your mortgage payments won't change.

• Credit cards usually have a much higher interest rate than personal loans.

  Credit cards usually have a much higher interest rate than personal loans.

• The low interest rate made it very cheap for businesses to borrow money.

  The low interest rate made it very cheap for businesses to borrow money.

Common Mistakes

• ✗ The bank gave me a very good interest percentage on my savings.

  ✓ The bank gave me a very good interest rate on my savings.

  Although it is a percentage, the standard financial term is always interest rate.

• ✗ I want to borrow money with a low interest tax.

  ✓ I want to borrow money with a low interest rate.

  Tax is paid to the government. The cost of borrowing money from a bank is the interest rate.

Related Expressions

Practice

• Before signing the mortgage agreement, make sure you check the ___.

  💡 The percentage cost of borrowing money.

  Show answer

  interest rate

• With inflation so high, savers are looking for accounts with a better ___.

  💡 The percentage return on your savings.

  Show answer

  interest rate