Interest

money · banking · saving

Banks pay you interest. When you put money in a savings account at a bank, the bank pays you extra money called interest as a thank you for letting them use your savings. Over time, your money grows even though you didn't earn it yourself.

Borrowers pay interest. If you borrow money from a bank to buy a house or a car, you have to pay back more than you borrowed. That extra amount is the interest, and it's the cost of borrowing.

Interest rates matter. Different banks and lenders charge different interest rates, which means the extra amount you pay or earn can be very different. A higher interest rate means more extra money either for you or that you owe.

Interest grows over time. The longer your money stays in a savings account, the more interest you earn because interest can earn its own interest. This is called compound interest, and it's like your money making babies that make their own babies.

Not the same as fees. Interest is different from a fee, which is a one-time charge. Interest keeps growing, while a fee is just a flat payment you make once.