What is the Meaning of: Interest rate | Concept and Definition of: Interest rate

Meanings, definitions, concepts of daily use
In the economic and financial field, the concept of interest concerns the cost of credit or the profitability of the money saved. It is therefore a term that allows to identify and estimate the value, usefulness, profit or gain something.
Simple interest means interest generates a placement through the initial capital. Interest generated by the capital over a period are not accumulated for the latter to produce the corresponding interests to the next period. However, the simple interest generated by the capital invested will be the same during all periods of placement at less than the rate or maturity does not change.
Compound interest, on the other hand, allows that the interest earned at the end of the investment period are not removed, but rather paintings and accumulated to the primary principal.
The concept of interest rates, in turn, shows the percentage to which the money is invested over a period of time. So we can say that the interest rate is the price of money that we pay or we cash by making a loan or a loan at any given time.
The interest rate can be fixed (it remains stable as long as takes the investment or the loan is returned) or variable (it is updated, usually every month, in order to adapt to inflation, to the variation of the exchange rate and other variables).
Finally, we will retain the prime interest rate is lower than that which is generally perceived to credits granted for specific purposes.
Note: This translation is provided for educational purposes and may contain errors or be inaccurate.

Recommended content