Interest rate
percentage of a sum of money charged for its use
An interest rate is the amount of interest due per period, as a proportion of the amount lent, deposited, or borrowed. Interest rate periods are ordinarily a year and are often annualized when not. Alongside interest rates, three other variables determine total interest: principal sum, compounding frequency, and length of time.
Interest rates reflect a borrower's willingness to pay for money now over money in the future. In debt financing, companies borrow capital from a bank, in the expectation that the borrowed capital may be used to generate a return on investment greater than the interest rates. Failure of a borrower to continue paying interest is an example of default, which may be followed by bankruptcy proceedings. Collateral is sometimes given in the event of default.
In monetary policy and macroeconomics, the term "interest rate" is often used as shorthand for a central bank's policy rate, such as the United States Federal Reserve's federal funds rate. "Interest rate" is also sometimes used synonymously with overnight rate, bank rate, base rate, discount rate, coupon rate, repo rate, prime rate, yield to maturity, and internal rate of return.
Definitions
Real versus nominal
The nominal interest rate is the interest rate without adjusting for inflation, whereas the real interest rate takes inflation into account.
“Interest rate” enters the record as percentage of a sum of money charged for its use. Crown Archives preserves that source wording while asking what Interest, rate and percentage can confirm, complicate or overturn.
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The citation trail is more important than the brevity of the summary: it shows where individual claims can be examined in context. The source revision retrieved here is dated Sep 18, 2026. The linked authority identifier is Q179179. None of the 0 selected statements returned an explicit reference.
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This entry incorporates text from “Interest rate” on English Wikipedia. Contributors are listed in the page history. Text is available under the Creative Commons Attribution-ShareAlike 4.0 License. Selected authority identifiers and statements are retrieved from Wikidata under CC0; their references and qualifiers remain part of the verification path.