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The interest rate is the percentage rate of interest charged to the borrower or paid to a lender, saver, or investor.

For Savings

The interest rate determines the amount of money that your money earns. The interest rate is a percentage used to figure out how much interest you will get. For example, if you have a $100 saved with an interest rate of 5 percent; at the end of the year, you will get $5.00 (5% of $100) in interest.

For Loans

The interest rate is the amount paid by a borrower to a lender in exchange for the use of the lender’s money for a certain period of time. Interest is paid on loans or on debt instruments as the percentage charged when you borrow money. See also Annual Percentage Rate (APR).

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