interest rate
noun
plural interest rates
: a rate (see rate entry 1 sense 1b) that is used to calculate simple interest or compound interest
an annual interest rate of 5%
:
a
: a rate that a lender (such as a bank) charges a borrower for a loan
Interest rates can be considered the price of borrowing money. "Quite simply, it's the amount charged to a borrower by a lender for use of an asset, expressed as a percentage of the principal value," says Peter C. Earle …—
Dawn Papandrea
Dawn PapandreaFederal student loans have fixed interest rates, which means that the interest rate will stay the same for the life of the loan.—Zina Kumok
Zina KumokVariable interest rates can go up, increasing your costs. The monthly loan payment will increase and the interest you pay will increase.—Mark Kantrowitz
Mark Kantrowitz
b
: a rate that is paid (as by a bank, government, or corporation) to an investor for the use of the money invested
Series I [government] savings bonds … are currently offering an interest rate of 9.62%.—Darla Mercado
Darla MercadoAnother option is putting money in CDs, which generally offer higher interest rates than savings accounts.—Jessica Merritt and Greg Garrison
Jessica Merritt and Greg GarrisonSince August, … interest rates on corporate bonds have fallen relative to yields on comparable Treasury securities …—Sewell Chan
Sewell ChanLet's say you put $2,000 into an account with a simple interest rate of 2%. At the end of one year, you would earn $40 in interest if you didn't add or take out any money. That's because 2% of $2,000 is $40.—Kate Rockwood
Kate RockwoodTake, for example, a person starting with $1,000 in a money market fund earning 5 percent per year. … After one year, the $1,000 has grown to $1,050.95, making the compound interest rate actually 5.095 percent—not 5.00 percent—because interest was also paid on the accumulated interest for each quarter.—Patricia Barnes-Svarney and Thomas E. Svarney
Patricia Barnes-Svarney and Thomas E. SvarneyExamples of interest rate in a Sentence
Recent Examples on the Web
Grace Cary/Getty Images Homebuyers and owners looking to refinance are often encouraged to monitor the mortgage interest rate climate daily.
—Matt Richardson, CBS News, 19 May 2026
How the financial pressure could affect interest rates.
—Elizabeth Robinson, NBC news, 19 May 2026
The landmark debut — and the potential capacity squeeze caused by other blockbuster listings in the pipeline, such as OpenAI — further complicates the outlook for Europe's IPO space, which is already grappling with ongoing bond market volatility and the prospect of looming interest rate hikes.
—Hugh Leask, CNBC, 19 May 2026
Lifting the interest rates paid for deposits that banks park at the Fed would entice lenders to divert dollars from checking and savings accounts to the Central Bank, curbing the loan portfolios that fuel expenditures across the economy.
—Shawn Tully, Fortune, 19 May 2026
The timing of the statue coincided with the Federal Reserve's interest rate cut announcement, ABC 7News reported.
—Kinsey Crowley, USA Today, 11 May 2026
The falling population and heavy debt load mean productivity will need to increase GDP by at least 2.5%, maybe 3% depending on the path of interest rates.
—Allison Schrager, Boston Herald, 11 May 2026
For the quarter, investment income was 7.4% below 2025, primarily due to lower short-term interest rates.
—Bill Stone, Forbes.com, 10 May 2026
Economists have pointed to the data-center buildout as a possible driver of demand for construction labor in 2026, even as homebuilding continues to be restrained by elevated interest rates.
—Bloomberg, Mercury News, 8 May 2026
Examples are automatically compiled from online sources to
show current usage.
Read More
Opinions expressed in the examples do not represent those of Merriam-Webster or its editors.
Send us feedback.
Matt Richardson, CBS News, 19 May 2026
How the financial pressure could affect interest rates.
—Elizabeth Robinson, NBC news, 19 May 2026
The landmark debut — and the potential capacity squeeze caused by other blockbuster listings in the pipeline, such as OpenAI — further complicates the outlook for Europe's IPO space, which is already grappling with ongoing bond market volatility and the prospect of looming interest rate hikes.
—Hugh Leask, CNBC, 19 May 2026
Lifting the interest rates paid for deposits that banks park at the Fed would entice lenders to divert dollars from checking and savings accounts to the Central Bank, curbing the loan portfolios that fuel expenditures across the economy.
—Shawn Tully, Fortune, 19 May 2026
The timing of the statue coincided with the Federal Reserve's interest rate cut announcement, ABC 7News reported.
—Kinsey Crowley, USA Today, 11 May 2026
The falling population and heavy debt load mean productivity will need to increase GDP by at least 2.5%, maybe 3% depending on the path of interest rates.
—Allison Schrager, Boston Herald, 11 May 2026
For the quarter, investment income was 7.4% below 2025, primarily due to lower short-term interest rates.
—Bill Stone, Forbes.com, 10 May 2026
Economists have pointed to the data-center buildout as a possible driver of demand for construction labor in 2026, even as homebuilding continues to be restrained by elevated interest rates.
—Bloomberg, Mercury News, 8 May 2026
Cite this Entry
“Interest rate.” Merriam-Webster.com Dictionary, Merriam-Webster, https://www.merriam-webster.com/dictionary/interest%20rate. Accessed 21 May. 2026.
Copy CitationLove words? Need even more definitions?
Merriam-Webster unabridged
