An interest rate expresses the cost of borrowing or the return on savings over a stated period.
Reviewed July 18, 2026 · 1 minute read
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An interest rate expresses the cost of borrowing or the return on savings over a stated period.
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.
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