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GCSE Mathematics · key term
Money paid for borrowing money, or money earned by allowing a bank or other organisation to use savings.
Used by Edexcel and OCR
Specification R9 · Paper 1, Paper 2, Paper 3
Revise: Simple Interest and Financial MathematicsInterest is an extra amount of money connected with borrowing or saving. A borrower usually pays interest for the use of someone else’s money. A saver may receive interest because the bank can use the money deposited with it.
Specification 5.03a · Paper 1 (Foundation), Paper 2 (Foundation), Paper 3 (Foundation), Paper 4 (Higher), Paper 5 (Higher), Paper 6 (Higher)
Money paid or received for borrowing or saving money.
Underline whether the question asks for the interest alone or the total amount. Add the principal only when the total is required.
For simple interest, always calculate each period’s interest from the original principal, not from a growing balance.
Use the financial context to check your operation: interest earned on savings increases the balance, while interest charged on borrowing increases the amount to repay.
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Interest is money connected with lending and borrowing. A saver may receive interest from a bank, while a borrower may pay interest to a lender. The starting sum is called the principal, and the interest rate tells you what percentage of that principal is paid or charged during each stated period.