Definitions for **"RATE OF INTEREST"**

With respect to a loan or loan type of investment (mortgage, bond, savings account, etc.), the percentage of principal charged to a borrower by a lender for use of the latter's money, usually expressed in terms of an annual rate unless otherwise stated.

the percentage of a sum of money charged for its use

The rate of interest can be thought of as the price of money. It is the extra proportion that has to be paid when borrowing money or the extra that a saver receives when putting their money aside for the future (unless they keep it under the mattress). The level of the rate of interest is determined by the Monetary Policy Committee of the Bank of England that meets each month.