An interest charge is a fee that lenders impose on borrowers for the use of borrowed money. It is typically expressed as a percentage of the principal amount, which is the original sum borrowed. This charge compensates the lender for the risk of lending and the opportunity cost of not using the money elsewhere. Interest charges can vary based on factors such as the type of loan, the borrower's creditworthiness, and prevailing market rates. Common examples of loans that may include interest charges are credit cards, mortgages, and personal loans. Understanding these charges is essential for managing debt effectively.