Explain how compound interest is better than simple interest when it comes to saving money.

Question

Mathematics

Kinsley Schneider

9 September, 02:54

Explain how compound interest is better than simple interest when it comes to saving money.

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Answers (1)

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Abbigail Mendez · Answer 1

I'll try to explain it.

Simple interest is when you make interest off of an amount of money.

Compound interest is when you make interest off an amount of money, and the interest that amount of money has collected over time.

Since compound interest is collecting money off the money you have in the bank, plus the interest off that money you have in bank, it is earning more interest than simple interest which is just collecting interest off the money in the bank.