What Is Compound Interest? Compound interest is a form of interest calculated using the principal amount of a deposit or loan plus previously accrued interest. Unlike simple interest, which doesn ...

Calculating simple interest requires knowing your principal amount, annual interest rate, and time period. Simple interest is better than compound interest when you're borrowing money.

Simple interest is definitely less common than compound interest in real-world applications. For example, when you hear a checking account or certificate of deposit 's yield, it is actually a form ...