What an interest rate does and does not tell you.

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.