Interest Definition

Interest is the money paid to a lender by the borrower in addition to the money that was borrowed (principal).

Interest Expanded Definition
As a small business owner, you might charge interest to a customer or pay interest to a lender (e.g., a bank).

Interest is usually computed as one of the following:

  • Nominal interest (flat rate)
  • Real interest (takes inflation into account)
  • Effective interest (compounded).

Related Article
What Is Interest?

Last Updated By

Rachel Blakely-Gray | Apr 12, 2023

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