Spread.
In plain English
A spread is the difference between two related numbers. In banking it is the gap between the interest a bank pays savers and the higher interest it charges borrowers, which is how the bank earns money. In trading it can mean the gap between the buy price and the sell price of an asset. In lending it can mean how far a loan's rate sits above a benchmark. Whenever you hear spread, the point is the same: someone is earning, or paying, the difference between two rates.
01Why it matters
Spreads are where a lot of the cost of borrowing and the profit of lending hide, so spotting them helps you see who is really making money.
02The math, step by step
A bank pays you 1 percent on savings and charges 7 percent on a car loan. The 6 percentage point spread is the bank's gross margin on that money.
03What this is NOT
A spread is NOT a rate on its own. It is the gap between two rates, so a small spread can still sit on top of a high or low base rate.