Simple interest is exactly what it sounds like: simple. You can use a simple interest calculator to figure out how much your money will earn if you choose to save it in accounts that typically ...

Simple interest does not, however, take into account the power of compounding, or interest-on-interest, where after the first year the 1% would actually be earned on the $101 balance—adding up ...

For example, if you borrow $1,000 from a friend and agree to pay 6% simple interest for two years, the formula above tells you that you'll pay $120 in total interest ($1,000 x 0.06 x 2).

The total interest payable over the three-year period of this loan is $1,576.25, unlike simple interest, but the interest amount isn't the same for all three years because compound interest also ...