Definitions 
The interest rate, expressed as a percentage, gives us the cost of borrowing money. Generally the interest rate is given over a period of 1 year.
From the lenders perspective the interest rate is the income (or interest) it is possible to receive when lending money.
Interest Rate Example
If you borrow $1000 at an annual interest rate of 10%, $100 would be due to the lender after 1 year. Similarly if you place £1000 in a savings account with an annual interest rate of 5%, you would receive £50 in interest by the end of the year. Over time, the rate of interest that you receive on your savings makes a big difference to the final sum you have left over.
Related Topics
Any examination of interest rates is not complete without also understanding inflation.
