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Finance & Banking vocabulary · Interest & Exchange Rates

Interest rate

Meaning in finance & banking, with examples

/ˈɪntrəst reɪt/nounCore term

In finance & banking, interest rate means: The price of borrowing money, shown as a percentage of the amount borrowed or saved for a period, usually one year.

In Turkish: faiz oranı, faiz

How it is used

Used everywhere in banking: loan offers, deposit products, central bank decisions and the news. Rates go up, rise, fall or are cut; banks charge interest on loans and pay interest on deposits.

Example sentences

  1. Our interest rate on business loans is linked to the central bank's policy rate.

  2. Many customers are waiting for interest rates to come down before they take out a mortgage.

Common collocations

  • raise interest rates
  • cut interest rates
  • charge interest
  • interest rate rise
  • low interest rate
  • fixed rateAn interest rate that stays the same for the whole loan or deposit term, or for an agreed period, so the payments do not change.
  • variable rateAn interest rate that can go up or down during a loan or deposit term, usually because it follows a benchmark rate.
  • APRShort for annual percentage rate: the yearly cost of a loan or credit card shown as a percentage, including interest and certain required fees.
  • policy rateThe main interest rate set by a central bank to steer the cost of money in the economy and bring inflation towards its target.
  • compound interestInterest calculated on both the original amount and the interest already added, so the total grows faster over time than with simple interest.

This word in other fields

The same English word can have a different meaning in another field:

More terms: Interest & Exchange Rates

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This page explains English vocabulary for learners. It is not financial advice.