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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.


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.


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


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.


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.


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.


Sums paid or earned for the use of money.

References in classic literature ?
So great was his interest that he had forgotten the particular derelict he had come to serve, until Spear stood almost at his elbow.
The original papers, together with the scarlet letter itself -- a most curious relic -- are still in my possession, and shall be freely exhibited to whomsoever, induced by the great interest of the narrative, may desire a sight of them I must not be understood affirming that, in the dressing up of the tale, and imagining the motives and modes of passion that influenced the characters who figure in it, I have invariably confined myself within the limits of the old Surveyor's half-a-dozen sheets of foolscap.
Rochester's project of marrying for interest and connections.
McCord contributed equal and identical interests in assets valued at $12,294,384 ($6,147,192 each) to a Texas limited partnership (LP), McCord Interests, Ltd.
The Open Market Exemption would not be available to Canco, regardless of whether Canco had a tax avoidance motive in respect of the US LLC interests.
Corresponding authors are required to submit a declaration of competing financial interests on behalf of all authors involved.
Ostensibly, the updated UCC code corrects the confusion that was created by the Court of Appeals in the 1977 Shor case, when it merged leasehold interests and security interests in cooperative corporations.
1843(k)(4)(H)) and this subpart authorize a financial holding company, directly or indirectly and as principal or on behalf of one or more persons, to acquire or control any amount of shares, assets or ownership interests of a company or other entity that is engaged in any activity not otherwise authorized for the financial holding company under section 4 of the Bank Holding Company Act.
Stakeholder representation means some interests are more special than others.
Others will probably be introduced later as new interests are identified.
The certificates represent ownership interests in a trust fund that consists of five pools of mortgage loans.
1031 like-kind exchange arena--exchanging real property for separate, fractional property interests in replacement properties.