Which term describes the rate used to calculate interest on loans and savings?

Which term describes the rate used to calculate interest on loans and savings?

• A. Savings Growth
• B. Balance
• C. Interest Rate
• D. ATM

Answer: (C)

Interest rate is the percentage used to determine how much interest is added to a loan or earned on savings. It represents the cost of borrowing or the return on saving, typically quoted on a yearly basis. When you borrow, a higher rate means more interest paid over time; when you save, a higher rate means more interest earned. For example, borrowing $1,000 at 6% adds about $60 in interest over a year (simple). Saving $1,000 at 2% earns about $20 in interest over a year. The other terms don’t describe this rate: balance is the amount you have or owe, ATM is a machine, and savings growth isn’t the rate used to calculate interest.

Interest rate is the percentage used to determine how much interest is added to a loan or earned on savings. It represents the cost of borrowing or the return on saving, typically quoted on a yearly basis. When you borrow, a higher rate means more interest paid over time; when you save, a higher rate means more interest earned. For example, borrowing $1,000 at 6% adds about $60 in interest over a year (simple). Saving $1,000 at 2% earns about $20 in interest over a year. The other terms don’t describe this rate: balance is the amount you have or owe, ATM is a machine, and savings growth isn’t the rate used to calculate interest.