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An interest rate is the percentage of money that you pay extra when you borrow money, like a loan, or the extra money you earn when you save or invest money. It's like the cost of using someone else's money or the reward for letting them use yours.
Suppose you take out a $10,000 loan from a bank to buy a car, and the bank charges you an interest rate of 5% per year. This means you'll have to pay an extra $500 (5% of $10,000) each year on top of the original amount you borrowed.
"Wit & Whimsy with the Dumb Ox: Unlocking Knowledge with Rhyme:"
In the world of money and loans,
Interest rates are the well-known tones.
A percentage, it does show,
The cost of money, high or low.
When you borrow, you must pay,
An interest rate, that's the way.
A small percent, but don't forget,
It adds up, like a growing pet.
And when you save or invest with care,
Interest rates are also there.
A reward you get, a tiny sum,
For letting others use your funds.
So, whether borrowing or saving too,
Interest rates will come to you.
A part of life, like sun and rain,
In the world of financial gain.