interest

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Interest

The price paid for borrowing money. It is expressed as a percentage rate over a period of time and reflects the rate of exchange of present consumption for future consumption. Also, a share or title in property.

Interest

Money that is paid in exchange for borrowing or using another person's or organization's money. Interest is calculated as a percentage of the money borrowed. There are two kinds of interest, simple interest and compound interest. In simple interest, the interest is calculated only over the original principal amount. For example, if one borrows $1,000 at 3% interest, the interest is $30 (3% of $1,000) each time it is calculated. In compound interest, interest previously paid is included in the calculation of future interest. For example, with the above loan, interest paid in the first month is $30 (3% of $1,000), in the second month it is $30.90 (3% of $1,030), and so forth. Compound interest is more common because it yields more for the lender.

interest

1. Payment for the use of borrowed money.
2. An investor's equity in a business.

Interest.

Interest is what you pay to borrow money using a loan, credit card, or line of credit. It is calculated at either a fixed or variable rate that's expressed as a percentage of the amount you borrow, pegged to a specific time period.

For example, you may pay 1.2% interest monthly on the unpaid balance of your credit card.

Interest also refers to the income, figured as a percentage of principal, that you're paid for purchasing a bond, keeping money in a bank account, or making other interest-paying investments.

If it is simple interest, earnings are figured on the principal. If it is compound interest, the earnings are added to the principal to form a new base on which future income is calculated.

Interest is also a share or right in a property or asset. For example, if you are half-owner of a vacation home, you have a 50% interest.

interest

the charge made for borrowing money in the form of a LOAN. Interest is payable on a number of short-term and long-term borrowing forms including LOANS, OVERDRAFTS, MORTGAGES, INSTALMENT CREDIT, LEASING, LOAN STOCK, DEBENTURES, BONDS, TREASURY BILLS and BILLS OF EXCHANGE.

Interest charges may be fixed or variable and payable weekly, monthly or annually depending on the size of the loan and the length of the loan period. When a loan is extended on a fixed-interest basis the rate remains unchanged throughout the life of the loan. However, in times of inflation the real or effective interest rate as opposed to the loan's agreed or nominal interest rate will fall as inflation reduces the PURCHASING POWER of money. In this case, where the lender is able to vary the interest charge, then the interest rate can be raised to offset the effects of inflation. For this reason, whereas most short-term loans are extended on fixed-interest terms, variable terms are usually applied to long-term loans.

Interest may be computed on a simple or compound basis. Simple interest is based only on the original amount of the loan, whereas compound interest is based on the original amount of the loan plus previous accumulated interest. For example, a £100 loan paying simple interest at 10% would accumulate to £110 at the end of the first year and £120 (i.e. £100 + £10 + £10) at the end of the second, whereas with compound interest the loan would accumulate to £121 at the end of the second year (i.e. £100 + £10 + £11 [10% of £110]). See INTEREST RATE, APR.

interest

the charge made for borrowing money in the form of a LOAN. Interest is payable on a number of short-term and long-term borrowing forms, including BANK LOANS, MORTGAGES, INSTALMENT CREDIT, LEASING, LOAN STOCK, DEBENTURES, BONDS, TREASURY BILLS and BILLS OF EXCHANGE.

Lenders require a NOMINAL INTEREST RATE that compensates them for the effects of INFLATION in reducing the PURCHASING POWER of any sums that they lend, so that the real or EFFECTIVE INTEREST RATES provide an adequate reward to lenders for forgoing current consumption and for the risk of default introduced in lending out money. In aggregate terms, interest is a source of income and is thus included as part of NATIONAL INCOME. In the THEORY OF SUPPLY, interest is a payment for the use of CAPITAL as a FACTOR OF PRODUCTION. See INTEREST RATE.

interest

Sums paid or earned for the use of money.

References in periodicals archive ?
Councillor Ron Lowes, who made the complaint, said: "Cllr Khan had been advised strongly to declare an interest and that was not done.
Colin Mann, leader of the council's opposition Plaid Cymru group, said: "Where they may have an interest all councillors are expected to declare an interest.
If too many members declare an interest, there might not be enough left to make a decision.
When told there was a likelihood he could be reported to the Public Services Ombudsman for Wales over his decision not to declare an interest, Mr Hardacre said he would seek guidance from the council's monitoring officer.
It concluded that Mr Thomas failed to declare an interest at meetings of the council's executive committee in June and September 2005.
A northumberland councillor has been found guilty of breaching the code of conduct after he failed to declare an interest in a discussion about wind farms.
The Board was called in after allegations that Cllr McLuckie had failed to declare an interest in the Skelton project at meetings.
Mr Maskell was found to have contravened the code of conduct by attempting to misuse his position, failing to declare an interest and, when appropriate, to withdraw from consideration of various planning matters on a number of occasions.
The code of conduct for MSPs states they must declare an interest in case it gives the 'appearance of prejudicing their ability to act in a disinterested manner'.
It followed a three-part complaint, which was partially upheld, from council leader Bob Stevens (Con, Long Itchington) who said she failed to declare an interest and leave a meeting.
Tory Education and Employment spokesman Mr Stephen Dorrell was fending off calls for his sacking yesterday after he apologised for failing to declare an interest in his Worcester company.
I am very concerned that Coun Hardacre did not declare an interest.