Interest Rates
Interest rates represent the cost of borrowing money or the return on savings. They are expressed as a percentage of the loan amount or savings balance over a specific period. When you borrow money, you pay interest to the lender, which is how they earn profit. Conversely, when you save money in a bank, the institution pays you interest as an incentive to keep your funds with them. Interest rates fluctuate based on various factors, including economic conditions, inflation, and central bank policies, affecting everything from loans and mortgages to savings accounts and investments.
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Interest rates are the cost of borrowing money or the return on savings, expressed as a percentage. When you take out a loan, the interest rate determines how much extra you'll pay back over time. Conversely, when you deposit money in a bank, the interest rate indicates how much the bank will pay you for keeping your money with them. Interest rates can fluctuate based on economic conditions, influencing spending, saving, and overall economic growth. Lower rates typically encourage borrowing and investing, while higher rates may prompt saving but can slow down economic activity.