In deposit terminology, the term Interest Rate refers to a specified amount of money paid by institutions on the use of cash deposits over a period of time. The Interest Rate also consists of the amount of money a borrower will pay a lender for the use of their funds over a period of time.
For example, an Interest Rate in a country usually reflects the borrowing cost that its central bank charges commercial banks and other financial institutions for money that the central bank lends to them. An Interest Rate can also be the rate at which these same banks and financial institutions in turn charge their customers for loans or pay them on savings and money market accounts. Financial institutions tend to loan out money at higher Interest Rates to their customers in the form of credit lines and mortgages, in addition to providing regular business loans to individuals and companies. An Interest Rate is usually charged on all forms of personal financial debt that includes credit card debt, automobile loans and retailer credit.