# interest

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Related to declared interest: Indexed annuity

## 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 ?
At the end of last year insiders told local media that the government's hopes to sell the majority stake in the bourse by the end of 2011 have gone sour as no bidders had declared interest.
In response to a series of questions from the Western Mail surrounding the Powis scheme, the university has confirmed that its vice-chancellor Professor Marc Clement has a declared interest in a number of supported companies.
But it is hard to see how these conditions are compatible with the Government's declared interest in examining ways in which the article could be used, and their wish that this should be on a regional basis.
Chester City chairman Stephen Vaughan made the only cash offer for the club but it was later withdrawn, leaving the community partnership of the Supporters Trust and the youth charity the Weston Spirit, which has a Liverpool base, as the only party with a declared interest in Tranmere's future.
Alego Usonga MP Samuel Atandi has declared interest in the Governor position.
The consumer can choose from declared interest account and index interest account.
A Chinese investment fund has declared interest in projects and business opportunities in Bulgaria's Black Sea city of Burgas.
The owner of the Sale Sharks rugby team, who announced the backing of the Ultraframe board for a takeover on June 2, could be drawn into a bid battle after two investment firms declared interest in a possible joint offer.
Allardyce, 51, who turned Newcastle down in 2004, has already declared interest in the England job and is determined to keep his options open.
And Souness insists his declared interest in the 25 year -old was not designed to undermine the Light Blues' UEFA Cup progress.
Others who have declared interest in the race are Kalonzo, Wetang'ula, Joho, Machakos governor Alfred Mutua, Kilifi's Amason Kingi, former Meru boss Peter Munya.
As per Finance Undersecretary Jose Emmanuel Reverente, Malaysia, in return, has declared interest in offering expert assistance to the Philippines.

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