In the world of finance and mathematics, compounding is a fundamental concept that can seem deceptively simple yet holds ...

Simple interest is based on the principal amount of a loan, while compound interest is based on the principal plus accumulated interest. Learn more in our guide.

Compound interest In the real world, simple interest is rarely used. When you deposit money into an interest-bearing account, or take out a line of credit, the interest that accumulates is added ...

Simple interest works in your favor when you borrow money, while compound interest is better for you as an investor.