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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 periodicals archive ?
Moskovski revealed that no bidders have formally declared interest into buying BDZ Freight Services yet.
My relationship with William Hill has been a declared interest for two years.
Pendred declared interest in fighting on the UFC's Dublin show, rumoured to be taking place in the 3 Arena in October, and would be looking at a big step up in competition in the Irish capital should the event go ahead.
At the meeting, the Prime Minister of Qatar declared interest in cooperation in transport, agriculture and energy.
The only candidate to have openly declared interest in running for office is Samir Geagea, tainted by his record when he was a Christian warlord during the civil war and who leads a right-wing and fiercely anti-Hezbollah political party.
Mohammad Tni, chief commissioner, TRC, made clear that there are still frequencies available for Orange and Umniah and noted that both companies had already declared interest in 4G acquisitions.
Lacazette has already declared interest from Everton, but says he wasn't interested in a move to Goodison Park.
The proposals for a huge $30 billion plant capable of processing 660,000 barrels of crude oil per day could undermine PTT's previously declared interest in investing in Myanmar's dilapidated and inadequate oil refining industry.
GPs post investment opportunities, market and broadcast messages to motivated investors with a declared interest in their strategy.
Despite these speculative numbers, ExxonMobil and Shell, along with a number of relatively small companies, have so far declared interest in helping the Turkish Petroleum Corporation (TPAO) tap the resource.
One of the newer types of indexed GUL products enables clients to select from three premium allocation choices to most appropriately match their needs--a declared interest account, a one-year index account and a five-year index account.
Tadbir is one of several parties that have declared interest in the refinery.