This link is concerned with interest, interest rates and their effect on the value of money. Companies pay millions of rupees as interest each year for use of money which they borrowed. We earn profit on money which we have invested in saving accounts, certificates of deposit etc… Interest is a fee (rent), which is paid for the use of money. We pay interest on the loans drawn from banks. Similarly, bank pays us interest on money deposited in savings accounts, etc… The money which is invested or lent is called principal or Capital. Interest is paid usually in proportion to the principal over the period for which money is used. Interest rate specifies the rate at which interest accumulates. Interest rate normally expressed as a percentage of principal per period of time e.g. 18% per month. 5% per year etc and sum of principal of interest is called amount. Interest rate actually tells us that how much amount is increased for every Rs.100. Interest is further divided into two parts: Simple Interest & Compound Interest