Learn About Nominal Interest Rate: Definition and Meaning in Economics

Written by the MasterClass staff

Last updated: Aug 26, 2021 • 5 min read

When you invest money into an interest-bearing account, you expect your balance to increase with time. Such an increase owes to two factors: the real interest rate paid by your investment account, and the overall rate of inflation. When you combine those two factors, you get what’s known as the nominal interest rate.