Interest Rate Meaning and Definition
Interest Rate
Pronunciation
/ˈɪn.tər.ɛs.t.reɪt/
Part of Speech
Noun
Definition
A rate at which interest is paid or charged on a loan or investment, usually expressed as a percentage.
Examples
- The bank offered a competitive interest rate on the new savings account.
- The company’s low interest rate on loans made it an attractive option for small businesses.
Synonyms
- %
- Rate
Antonyms
- No interest
- Savings
Etymology
The term “interest rate” originates from the concept of interest in mathematics and finance, which dates back to ancient civilizations. The modern definition emerged in the 14th century, influenced by the development of mathematical models for compound interest.
Usage Notes
When discussing interest rates, it’s essential to consider the context, as rates can vary depending on the type of loan, credit score, and market conditions. It’s also crucial to understand the compounding frequency and the effects on the total amount borrowed or earned.
Cultural References
The concept of interest rates has appeared in various literary and artistic works, such as in Dickens’ novel “Little Dorrit”, where the plot revolves around a character’s struggles with debt and interest rates. Additionally, the 1979 film “The Muppet Movie” features a song about “interest rates and bank accounts”.
Idiomatic Expressions or Phrases
- “Break even” – to achieve a balance between income and expenses, often influenced by interest rates
- “Compound interest” – the effect of interest rates on the total amount over time
Related Words or Phrases
- Fees
- Taxes
- Inflation
Collocations
- Interest rate hike
- Low interest rate environment
- Federal interest rate
Frequency of Use
Interest rates are a frequently discussed topic in financial news and media, with the frequency and tone of conversation often influenced by market conditions and economic changes.
Common Misspellings
- Interst rate
- Intrest rate
- Intrest Rates