An interest rate is a percentage charged on the total amount you borrow or paid on the amount you save.
Even a small change in interest rates can have a big impact. It’s important to keep an eye on whether they rise, fall or stay the same.
If you’re a borrower, the interest rate is the amount you are charged for borrowing money – a percentage of the total amount of the loan. You can borrow money to buy something today and pay for it later.
Interest is what you pay for the privilege. It's the cost you pay to ‘hire’ someone else’s money.
If you’re a saver, it’s the same except the interest is paid to you – because banks are paying to hire your money.