Definition
The price of money: what borrowers pay lenders. You earn it on savings and bonds and pay it on cards, loans, and mortgages.
Why it matters
Every balance in your life sits on one side of interest or the other. Getting rich slowly is largely moving yourself from the paying side to the earning side.
Example
A household pays 6.5% interest on a mortgage and 22% on a card balance while earning 4.5% on savings. Paying down the card is a guaranteed 22% return, better than any investment they could buy.
Related terms
This definition is educational, not financial, legal, or tax advice. U.S. rules and limits change; verify time-sensitive details with official sources. See our disclaimer.