What is interest?

Interest Definition: Interest is an amount that is usually a percentage charged for the opportunity to borrow money from a bank or a financial institution. The amount of interest you pay on loan is called the APR or annual percentage rate, which is the amount the bank or lender receives from the borrower.

Interest also refers to the amount that accumulates on an investment, which is considered a form of income. Interest can accumulate on savings accounts, bonds, GICs, and other investment options. The amount of interest paid or charged depends on the financial institution, the credit history (for a loan), and other factors.

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