Interest rate is the percentage of additional cost added to your balance. Essentially you are paying for the extra time to use that money.
It is based on how much of a cap you have on your credit card, the bank you're lending from, the type of credit card, and your credit score.
Anytime you are borrowing money (using a credit card, taking out a loan, etc) there will usually be an interest rate.
For example, if you borrow $5,000 at a simple interest rate of 3% per year, and you have it for 5 years, you'll pay a total of around $790 in interest.