what is a interest rate
Interest rate. Interest rate is the percentage of the face value of a bond or the balance in a deposit account that you receive as income on your investment. If you multiply the interest rate by the face value or balance, you find the annual amount you receive. For example, if you buy a bond with a face value of $1,000 with a 6% interest rate, you'll receive $60 a year. Similarly, the percentage of principal you pay for the use of borrowed money is the loan's interest rate.