Frequently Asked Questions
What is compound interest?
Compound interest is interest calculated on both the initial principal and the accumulated interest from previous periods. It causes wealth to grow exponentially over time.
What is the difference between simple and compound interest?
Simple interest is calculated only on the principal, while compound interest is calculated on the principal plus previously earned interest. The difference grows significantly over time.
What is the compound interest formula?
A = P(1 + r/n)^(nt), where P is the principal, r is the annual interest rate, n is the compounding frequency, and t is the time in years.
Updated 2026 — latest rates