Interest payments

Interest payments are the cost you pay for borrowing money or the return earned on a loan or investment. When you borrow money, such as through a loan or credit card, you agree to pay back the original amount plus additional money called interest, which compensates the lender for the risk and opportunity cost. Similarly, if you invest money, the interest you earn is the payment from the institution for allowing your money to be used. These payments are typically made regularly (monthly, quarterly, annually) based on the agreed interest rate and the amount borrowed or invested.