Understanding Interest Rates

What is an interest rate?

An interest rate is a percentage used to describe the cost of borrowing money or the return earned on savings or some financial products.

Where interest rates are used

Interest rates appear in many financial contexts. The exact way they are calculated and disclosed can vary.

• Mortgages and home loans
• Personal loans
• Credit cards
• Savings accounts
• Investment products
• Business finance

Why rates matter

Small changes in an interest rate can produce large changes over long periods, especially when a balance is large or when interest compounds.

Fixed and variable rates

Some products use rates that remain fixed for a period. Others may change depending on market conditions, provider decisions, or product terms.

Important caveat

This page is general educational information only. It is not financial, investment, legal, tax, accounting, medical, or regulated advice. Rules, products, fees, taxes, and protections vary by country, provider, and personal circumstances.