What term refers to the percentage charged on a loan or paid on savings?

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

Answer: (A)

Interest rate is the percentage charged on a loan or paid on savings. It shows how much of the principal you must pay back as interest when you borrow, or how much you earn when you save. For example, a 5% rate on a $1,000 loan adds $50 in interest, and a 5% rate on $1,000 in savings would earn $50. Savings growth describes how the balance increases over time, but it isn’t the percentage itself. Balance is the current amount of money in the account, and ATM is just the cash machine used for withdrawals. So the term that matches the description is interest rate.