The CPA Group, P.C.

 

4267 Canal Avenue SW

Grandville, MI 49418

Phone: 616-538-0460

 

Website: www.thecpagroup.com

September 2022

Simple vs Compound Interest

Simple vs Compound Interest

Understanding the difference between simple and compound interest is not hard.


COMPOUND INTEREST
Compound interest is the rate of interest paid on the principal and on the interest previously earned. This can help you to build wealth over time because the interest compounds on top of interest, in addition to the principal.


SIMPLE INTEREST
Simple interest is the rate of interest that you would pay on the principal only. As a borrower, simple interest is better because you’re not paying interest on interest. It’s easier to repay debt with simple interest.


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