Financial Dictionary

Financial Dictionary - definitons of investment, economic and financial terms

Atlantic Financial

Atlantic Financial

Investment Word

Interest Rate

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An Interest Rate is an amount which is charged (or paid) for the use of money. An interest rate is often expressed as an annual percentage of the principal.

Interest Rates are calculated by dividing the amount of interest by the amount of principal. Interest rates often change as a result of inflation and Federal Reserve policies.

For example, if a lender (such as a bank) charges a customer $90 in a year on a loan of $1000, then the interest rate would be: (90/1000)*100% = 9%

interest rate - definition

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