The main difference between yields and interest rates is that each term refers to different financial instruments. Yield commonly refers to the dividend, interest or return the investor receives from a security like a stock or bond, and is usually reported as an annual figure. Interest rate generally refers to the interest charged by a lender such as a bank on a loan, and is typically expressed as an annual percentage rate (APR).
For example, if PepsiCo pays a quarterly dividend of 50 cents and the stock price is $50, then the annual dividend yield would be 4% [(50 cents x 4 quarters) / ($50)]. Therefore the current yield is 4%. If the stock price increases to $100 and the dividend remains the same, then the yield becomes 2%. (Bond yield is a bit more complex  if you want to learn about it take a look at our tutorial: Bond Basics: Yield, Price And Other Confusion.)
As an example of interest rates, suppose you go into your bank to borrow $1000 for a new bicycle and the bank quotes you a 5% interest rate on your loan. If you borrow this amount for one year, the interest you would pay on top of paying back the $1000 would be $50 (simple interest: $1000 x 0.05). If the interest rate is compounded then the interest rate you will pay would be a little bit more. Lenders charge interest to compensate for the opportunity cost of not being able to invest it somewhere else. (To learn on compound interest, see Accelerating Returns With Continuous Compounding.)
This question was answered Joseph Nguyen.

What is the difference between yield and rate of return?
Read about the differences between yield and rate of return. See why many novice investors often struggle more with the concept ... Read Answer >> 
What is the difference between the yield of stock and the yield of a bond?
Explore and understand the various meanings of the investment term "yield" as it is applied to equity investments and bond ... Read Answer >> 
Can I use the current yield to compare a bond to an equity investment?
Learn about the different types of yield measurements for stocks and bonds, and find out how to make careful comparisons ... Read Answer >> 
What is the difference between yield and dividend?
Learn how to differentiate between dividend yield and dividend return, and see why dividend yield is the more popular rate ... Read Answer >> 
Which is more important  dividend yield or total return?
Learn to distinguish between those times when dividend yield or total return is a more useful performance metric for a company's ... Read Answer >> 
What size of annual dividend yield is typical of companies in the financial services ...
Learn the importance of calculating the annual dividend yield and how income investors can use it to analyze companies in ... Read Answer >>

Investing Basics
Calculating Capital Gains Yield
Capital gains yield refers to a securityâ€™s appreciation or depreciation during the time itâ€™s held. 
Credit & Loans
All Your Questions About Loan Interest Rates
If you think interest rates donâ€™t really matter  think again. Interest rates have a huge impact on your finances. 
Economics
Explaining Interest
Interest is the price charged to borrow money, and is typically expressed as a percentage of the principal, or the amount loaned. 
Bonds & Fixed Income
Understanding Interest Rates, Inflation And Bonds
Get to know the relationships that determine a bond's price and its payout. 
Active Trading
Finding The Best Yields
Using yields to supplement earnings can mean big bucks, with the right strategy. 
Investing
Understanding the Different Types of Bond Yields
Any investor, private or institutional, should be aware of the diverse types and calculations of bond yields before an actual investment. 
Investing Basics
The Risks of Chasing High Dividend Stocks
Dividend stocks offer enticing yields, but a lot can go wrong on the way to collecting that dividend payout. 
Investing Basics
High Yield Stocks Can Hurt Your Retirement Nest Egg
High yield stocks can give you a handsome return, but for retirement investors the risk far outweighs the reward. 
Bonds & Fixed Income
Bond Yields: Current Yield And YTM
A bond's current yield, also called "bond yield," is the interest it pays annually divided by the bond's price. A stock's current yield, also called "dividend yield," is the sum of its annual ... 
Investing Basics
How to Get More Yield From Your Investments
Yield seeking investors can boost the amount of income their investments generate through tweaking their portfolio of stocks and bonds.

Yield
The income return on an investment. This refers to the interest ... 
Current Yield
Annual income (interest or dividends) divided by the current ... 
Bond Yield
The amount of return an investor will realize on a bond. Several ... 
Interest Rate
The amount charged, expressed as a percentage of principal, by ... 
Yield On Cost  YOC
The annual dividend rate of a security divided by the average ... 
Indicated Yield
The dividend yield that a share of stock would return based on ...