Interest Rate
The percentage charged by a lender for borrowing money, or earned on savings.
Interest rates are the price of money. When you borrow, you pay interest (mortgage at 6.5%, credit card at 24%). When you save, you earn interest (savings account at 4.5%, CD at 5%). The Federal Reserve sets the federal funds rate, which influences all other rates in the economy. When the Fed raises rates, borrowing becomes more expensive (slowing the economy) and saving becomes more rewarding. Interest rates in 2025-2026 are historically elevated at 4-5% for savings and 6-7% for mortgages.
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