Interest

Definition

Interest is the cost of borrowing money, typically expressed as a percentage of the total amount loaned, which a borrower pays to a lender for using their funds. It also refers to the income earned by those who lend money or invest in financial instruments.

Related terms

Loan: A sum of money that is borrowed and expected to be paid back with interest.

Investment: The act of allocating resources, usually money, with the expectation of generating an income or profit.

Principal: The original sum of money borrowed in a loan or put into an investment, excluding any interest or growth