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.

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 >> 
What is the difference between yield and return?
Return expresses what an investor has actually earned on an investment during a certain time period in the past. Yield measures ... 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 >> 
What factors drive share prices in the aerospace sector?
Learn about the average annual dividend yield for companies in the electronics sector and understand why the average is a ... Read Answer >>

Investing
How Bond Yields Could Topple the Stock Market
Bond yields have reached a crucial point since the election that could be bad news for the stock market. 
Investing
Calculating Capital Gains Yield
Capital gains yield refers to a securityâ€™s appreciation or depreciation during the time itâ€™s held. 
Managing Wealth
Finding The Best Yields
Using yields to supplement earnings can mean big bucks, with the right strategy. 
Investing
Understanding Interest Rates, Inflation And Bonds
Get to know the relationships that determine a bond's price and its payout. 
Investing
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. 
Investing
A History of the S&P 500 Dividend Yield
Find out why the dividend yield for the S&P 500 Index remains historically low, and what dividend yields used to look like before the Internet Age. 
Financial Advisor
Simple Math for FixedCoupon Corporate Bonds
A guide to help to understand the simple math behind fixedcoupon corporate bonds. 
Investing
4 Types Of Money Market Yields
We give you four equations to help figure out the yields on your investments. 
Investing
Dividend Yield For The Downturn
Highdividend stocks make excellent bear market investments, but the payouts aren't a sure thing.

Indicated Yield
The dividend yield that a share of stock would return based on ... 
Yield Spread
The difference between yields on differing debt instruments, ... 
Interest Rate
The amount charged, expressed as a percentage of principal, by ... 
Back Up
A slang term for the movement in spread, price or yield of a ... 
Current Yield
Annual income (interest or dividends) divided by the current ... 
Yield Pickup
The additional interest rate an investor receives when selling ...