An interest rate is the cost or benefit associated with the lending of money. Where interest rates are concerned there are always a borrower and a lender. Borrowers pay interest while lenders receive interest payments.
From the perspective of a borrower, an interest rate can be considered the price that he pays to use money that he does not currently posses. The most common types of loans that the average person will encounter where he acts as the borrower include mortgages, car loans, student loans, and credit cards. In most cases these interest rates are expressed in terms of APR (Annual Percentage Rate).
If asked, very few average citizens might also consider themselves a lender - but that does not change the fact that almost every person lends their money out at interest. Savings accounts and interest bearing checking accounts are ways that most people engage in the benefits associated with the lending of money. These interest rates are often expressed in terms of APY (Annual Percentage Yield). Another method for average citizens to benefit from lending money is to engage in peer-to-peer (P2P) lending through the various avenues available (Prosper, Lending Club, and others).
[...] percentage yield (APY) can be seen as an accounts true interest rate. It is the percentage that indicates the true return of an interest rate over the course of a year [...]
[...] account is more difficult to access than money deposited in a checking account but offers a higher interest rate (often expressed in APY, annual percentage yield). A savings account holder must travel to an ATM or [...]