In the fields of finance and economics, interest represents the payment made by a borrower or a financial institution to a lender or depositor. This payment is calculated as an amount exceeding the original principal sum, determined by a pre-established rate.
Interest is distinct from other financial mechanisms such as fees or dividends. While a fee is a separate charge for services, a dividend is a share of company profits distributed to shareholders on a pro rata basis. Unlike interest, which is fixed in advance, dividends are contingent upon the financial success of an enterprise and the risks taken by its owners.