Interest is the price paid for borrowing or lending money. You either owe interest on money borrowed or earn interest on money on loan to someone else. Any money in a bank account is actually on loan to the bank and it generates interest for the account holder, but it’s usually a very small percentage. Other interest-bearing investments include government bonds.
On the flip side, interest rates on money that you borrow from a bank, on a credit card, for example, can be quite steep. Short-term loans generally come with higher interest rates than longer-term loans, which includes home loans and vehicle finance.
