An interest rate is the cost of borrowing money or the return on investment earned on deposited money. It is usually expressed as a percentage of the principal amount and is typically charged or paid annually. Interest rates can be fixed or variable depending on the type of loan or investment and are set by financial institutions, central banks, or determined by market forces. They play a significant role in determining the cost of loans, mortgage payments, credit card balances, and the overall health of the economy.
