Why Interest Rates Matter

How Federal Reserve rate hikes and rising bond yields affect the economy and your investment strategy.

What do interest rates represent?

An interest rate is the cost of borrowing money, typically expressed as an annualized percentage rate. Take out a $100 loan at a 10% rate and you’ll owe $10 a year in interest. Add up all the borrowing in the U.S. by nonfinancial com­panies, consumers and government entities, and you get a whopping $46.3 trillion in outstanding debt, all of it racking up interest.

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Daren Fonda
Senior Associate Editor, Kiplinger's Personal Finance
Daren joined Kiplinger in July 2015 after spending more than 20 years in New York City as a business and financial writer. He spent seven years at Time magazine and joined SmartMoney in 2007, where he wrote about investing and contributed car reviews to the magazine. Daren also worked as a writer in the fund industry for Janus Capital and Fidelity Investments and has been licensed as a Series 7 securities representative.