The real interest rate indicates the actual borrowing cost or return on savings after taking into account the impact of inflation. This provides consumers with a fuller picture of how interest rates will affect their finances over the long term.  Since the impact of inflation can be significant, real interest rates serve as a useful reference point for borrowers and savers. Higher real interest rates are generally good for savers but bad for borrowers. On the flip side, lower real interest rates tend to benefit borrowers and are detrimental to savers.