eli5 what is an interest rate?

Question

please ACTUALLY explain this like im 5 i genuinely cannot grasp this concept whatsoever. i’m opening a savings account and it says;

“The interest rate depends on your account balance. All rates are variable. 4.25% p.a. on balances less than $50,000. 4.25% p.a. on balances between $50,000 – $249,999.”

am i paying for my own savings account???? what??????? i am so confused i feel like im going crazy

In: 0

Answer 1

In the context of savings account, it’s the interest the bank pays you, since they’re the ones borrowing the money from you