View synonyms for interest rate

interest rate

[ in-ter-ist reyt, -trist ]


, Finance.
  1. Business. the amount that a lender charges a borrower for taking out a loan, for maintaining a balance on debt, etc.: typically expressed as an annual percentage of the loan balance.
  2. Banking. the amount earned on a savings, checking, or money market account, or on an investment, such as a certificate of deposit or bond: typically expressed as an annual percentage of the account balance or investment sum.

interest rate

  1. The usual way of calculating interest — as a percentage of the sum borrowed.

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Word History and Origins

Origin of interest rate1

First recorded in 1885–90

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Compare Meanings

How does interest rate compare to similar and commonly confused words? Explore the most common comparisons:

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Example Sentences

The Fed, in turn, has no plans to raise interest rates until the labor market heals substantially.

The Fed is using interest rates as a lever by buying bonds and mortgage-backed securities to keep rates low to stimulate the economy during the pandemic.

Take the interest rate you are earning and divide 72 by that number.

The guarantee became a windfall for lenders when interest rates fell.

Making the leap to clean powerIn the midst of pandemic-induced high unemployment and low interest rates, renewables and their now-cheap prices could finally have their moment.

The company increasingly relied on Lenders Funding LLC, a firm that fronted cash at an interest rate of 35 percent.

But more broadly, the low interest-rate environment has been a gift to companies.

In May, for example, IBM sold $1.2 billion in seven-year bond at an interest rate of just 1.625 percent.

In November 2011, the government raised $17.224 billion, selling 30-year bonds at a 3.125 percent interest rate.

This is especially true in an ultra-low-interest rate environment.

If credit were contracted there would be tight money and a high interest rate.

The interest rate varies from five to five and a half per cent.

When in 1858 or '59 my father sold the hotel, its purchaser mortgaged it, paying an interest rate of twenty-four per cent a year.

The interest rate will not be changed within the next fifteen or twenty years.

The interest rate should be set at such a point that the bonds could be sold at a premium.


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More About Interest Rate

What does interest rate mean in banking?

Interest rate is the amount that is charged for a loan or purchase made on credit, typically expressed as an annual percentage of the loan or credit balance. The interest rate represents the cost to the borrower for taking out the loan or making a purchase on credit, and is the rate of return for the lender or creditor.

Most loans, mortgages, credit card balances, or purchases made on credit use simple interest, in which the interest rate applies only to the outstanding balance, without adding in or compounding the interest.

For example, if a loan of $1,000 carries an annual interest rate of 10%, then the borrower pays the lender $1,000 x 10% = $100 in interest during each year of the loan. As the balance is paid down, the amount of interest due goes down accordingly.

For credit cards, the interest rate may be stated as an APR (annual percentage rate) to indicate the amount of interest charged if the credit balance were carried for a full year.

Examples of interest rate in a sentence

“An interest rate is the percentage of the principal (total amount of money borrowed) that lenders will charge you to borrow money from them.”
—“What Is A Good Interest Rate?” Rocket Loans.  Retrieved March 15, 2020.

“Fixed interest rate loans lock in an interest rate that remains the same over the entire life of the loan.”
—“What Is A Good Interest Rate?” Rocket Loans.  Retrieved March 15, 2020.

“Since home equity loans are secured, borrowers tend to get a lower interest rate compared with personal loans.”
—“Home Equity Loan Vs. Personal Loan: Which Is Better For You?” Rocket Loans.  Retrieved March 15, 2020.

interest rate vs. APR

Interest rate and APR (annual percentage rate) are terms that are easy to confuse, as they are both annual percentage rates related to how much a loan will cost on top of the principal amount being borrowed.

The interest rate is the advertised rate of interest used in calculating the interest expense on a loan. The interest expense is the remaining balance (or principal) multiplied by the annual rate.

APR includes the interest expense as well as other charges or fees involved in getting the loan.

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