Interest & Interest Rates

Interest is the price you pay for using someone else’s money — or the reward you earn for letting them use yours. Whether you’re taking a loan or making a deposit, the amount of interest depends on three things: the principal (the original sum), the rate (expressed as a percentage), and the time period. The interest rate is simply that percentage, usually quoted per year, and it determines how fast your money grows or your debt piles up. Understanding this single number is the f …