What is interest on money saved?

• A. A fee charged for keeping money in a bank.
• B. Extra money earned on savings, or the cost of borrowing money, depending on context.
• C. The amount of money you spend on interest-free items.
• D. The interest rate printed on a store receipt.

Answer: (B)

Interest on money saved is the extra money you earn when you keep money in a savings account. When you deposit money, the bank uses it for a while and pays you a portion of their profits as interest. The amount grows with the interest rate and the time your money stays deposited. For example, saving $100 at 3% for a year adds about $3, so you’d have around $103. The same word can also mean the cost of borrowing money; if you borrow, you pay interest to the lender. So this idea covers both earning from saved money and paying when borrowing, depending on the situation. The other ideas describe a bank fee, something unrelated to savings, or an incorrect notion about store receipts, which isn’t how interest on savings works.