Australia's #1 for Law
Join 150,000 Australians every month. Ask a question, respond to a question and better understand the law today!
FREE - Join Now
Interest, in finance and economics, is payment from a borrower or deposit-taking financial institution to a lender or depositor of an amount above repayment of the principal sum (that is, the amount borrowed), at a particular rate. It is distinct from a fee which the borrower may pay the lender or some third party. It is also distinct from dividend which is paid by a company to its shareholders (owners) from its profit or reserve, but not at a particular rate decided beforehand, rather on a pro rata basis as a share in the reward gained by risk taking entrepreneurs when the revenue earned exceeds the total costs.For example, a customer would usually pay interest to borrow from a bank, so they pay the bank an amount which is more than the amount they borrowed; or a customer may earn interest on their savings, and so they may withdraw more than they originally deposited. In the case of savings, the customer is the lender, and the bank plays the role of the borrower.
Interest differs from profit, in that interest is received by a lender, whereas profit is received by the owner of an asset, investment or enterprise. (Interest may be part or the whole of the profit on an investment, but the two concepts are distinct from each other from an accounting perspective.)
The rate of interest is equal to the interest amount paid or received over a particular period divided by the principal sum borrowed or lent (usually expressed as a percentage).
Compound interest means that interest is earned on prior interest in addition to the principal. Due to compounding, the total amount of debt grows exponentially, and its mathematical study led to the discovery of the number e. In practice, interest is most often calculated on a daily, monthly, or yearly basis, and its impact is influenced greatly by its compounding rate.

View More On
  1. S

    NSW Real Estate Agent is not working in my best interest

    Hi, I'm just after some advice if possible. We put our house on the market with an agent & the second person to view the property made a full price offer. He had no finance approved, so we didn't take it seriously. A week later the agent said he would send the sales advice to the Conveyancer...
  2. M

    QLD Witness conflict of interest

    In a Family Court trial can the other party Subpoena a witness to give evidence if you have a legal matter in place with that witness. Is this a conflict of interest?
  3. C

    Post Judgment Interest

    I have a post judgment debt that hasn’t been paid for 5 years. Can I get compound interest for late payment? I am confused how the old law on simple interest tors with commercial reality today.
  4. C

    NSW Post-judgment Interest

    I have a post-judgment debt that has remained unpaid for 5 years. Can I get compound interest? I am confused with how the old law on simple interest works with today’s commercial reality....
  5. B

    VIC Interest on Returning Bonds to Aged Care Resident's Family

    Hi I am on the Committee of Management at a not for profit Aged Care facility. When returning bonds to resident families what are our options. Can we just deposit the money in a nominated solicitors trust fund or set up a bank account in the name of the estate of the deceased person? We are...
  6. M

    QLD Ex in new relationship. DV in front of our son.

    My ex re-partnered a month after we broke up and started living with her immediately. He/they wanted shared custody of our young son immediately but I was concerned that it was too early for our child to be a part of a new family unit/dynamic. I was also concerned that the relationship wouldn't...
  7. M

    QLD Conflict of Interest between a solicitor and conveyancer

    My ex partner and I just sold a home due to separation/divorce. His solicitor and our joint conveyancer (who is handling the home sale) seem to have a conflict of interest. I have requested the Conveyancer's trust fund details over the phone. She said she would send me an e-mail with the...
  8. F

    NSW Clarification on General Damages and Interest for Personal Injuries prior to 2002.

    Hi, I justed wanted to see if the following could be verified by someone in Queensland in relation to tort law/personal injury/negligence: Injuries arising prior to 2002, general damages are still assessed under the common law and not under the Civil Liability Act 2003 (Qld), and therefore...
  9. G

    QLD Car wrongfully repossessed

    What are my rights? Car was purchased, then used as collateral on a loan by the previous owner after I had purchased the car. The car was not even in the previous owners name anymore as ownership had been transferred. The car was repossessed yesterday and we thought it had been stolen.