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The cost of borrowing money or the return on saving it, usually shown as a percentage of the amount borrowed or saved.
In Depth
When you borrow money, like for a loan or credit card, the interest rate is what you pay the lender for using their money. When you save or invest money, like in a savings account or CD, the interest rate is what the bank pays you for keeping your money with them. It's usually shown as an annual percentage, but can be calculated more frequently.
Example
If you take out a car loan with a 5% interest rate, you'll pay an extra 5% of the loan amount each year in addition to the principal.