what are interest rates presented by Wall Street survivor.com interest is a fee paid by someone who borrows money to the person he borrows it from and an interest rate is the amount that borrower pays here's Ben Ben just graduated from high school and was accepted into a top university sounds great right only problem the tuition is too much for him and his parents to bear so Ben and his folks head over to the bank to borrow money for school Ben talks to the banker and gets a loan for $50,000 to pay for his education but why would the bank do this Ben's a nice guy and all but what's their benefit in lending out the money the answer is interest rates in exchange for the $50,000 loan the bank will charge Ben 5% interest each year until the loan is repaid so each year Ben will pay the bank $2,500 in interest interest is almost like paying rent on the money you're borrowing here's another scenario imagine Ben has saved up $10,000 that he keeps in a savings account at the bank by keeping his cash there he is actually lending his money to the bank the bank can then use this money for Investments or to lend to other people just like the bank charge Ben an interest rate for the money he bored for University the bank pays Ben an interest rate in exchange for keeping his money with them the longer Ben keeps his money in his savings account the more interest he will earn in fact even his interest will gain interest this is known as compound interest for example if interest rates are 5% in year 1 Ben will earn $500 on his $10,000 principal in year two Ben's account grows to $10,500 and he will earn $525 in interest in the third year Ben's account continues to grow exponentially to $1,025 and he will earn $551 25 in interest as long as Ben keeps his money in the bank his principal will continue growing exponentially thanks to comp compound interest most personal finance experts say the concept of compound interest is the most important thing in growing your retirement Nest Egg for more on interest rates retirement and other personal finance topics head over to Wall Street survivor.com