Question 1

Which is better – simple interest or compound interest?

Accepted Answer

Compound interest is generally better for investments as it allows your money to grow faster. Simple interest is better when you are borrowing, as you pay less overall.

Question 2

How does compound interest grow wealth?

Accepted Answer

Because interest is calculated on both the principal and previously earned interest, your balance grows exponentially over time.

Question 3

Can I convert simple interest into compound interest?

Accepted Answer

Not directly, but you can invest money earned from simple interest into accounts that compound interest.

Question 4

Is compound interest always good?

Accepted Answer

Not necessarily. For borrowers, compound interest can make debt more expensive, especially with frequent compounding like on credit cards.

Business And Investment

Simple Interest vs Compound Interest Key Differences