An interest rate tells you how high the cost of borrowing is, or high the rewards are for saving.

So, if you’re a borrower, the interest rate is the amount you are charged for borrowing money, shown as a percentage of the total amount of the loan. The higher the percentage, the more you have to pay back, for a loan of a given size.

If you’re a saver, the savings rate tells you how much money will be paid into your account, as a percentage of your savings. The higher the savings rate, the more will be paid into your account for a given sized deposit.

Even a small change in interest rates can have a big impact. It’s important to keep an eye on whether they rise, fall or stay the same.

What is Bank Rate?

‘Bank Rate’ is the key interest rate in the UK. It is our job to set this interest rate.

Why are there so many different interest rates?

The number of different interest rates available when you borrow or save can be confusing.

The interest rates high street banks set depend on more than just Bank Rate.

For loans, other factors are considered, including the risk of the loan not being paid back. 

The greater the lender thinks that risk is, the higher the rate the bank will charge. It can also depend on how long you want to take out a loan or mortgage for.

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