What is an interest Rate
An interest rate is a percentage charged on the amount that you save or borrow. Most are usually quoted annually, but not always, so make sure you double-check with your lender.
What is an interest rate when you borrow money
When you borrow money, you are charged an interest rate which is a percentage of the total amount of the borrowing or loan. These rates are normally charged when you borrow money to buy something today and pay it later over a fixed term.
What is an interest rate when you save money
When you save money, banks will give you a rate which is a percentage of the amount you can earn interest on your savings. If you save money in a savings account with an annual rate of 5% a year, you will earn 5% of the money saved annually. Click here for the Government guidance on savings tax.
What is an interest rate on mortgages
If you borrow money to purchase a property and the rate is 5% a year, it will cost you 5% of the amount borrowed. For example, if you borrowed £100 with an annual rate of 5% you would expect to pay back £105.