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Interest
Money paid regularly at a particular rate for the use of money lent, or for delaying the repayment of a debt.
Simple Interest
With Simple Interest, the interest is calculated based off of the original sum, or principal.
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Compound Interest
With Compound Interest, the interest is calculated based off of the original sum PLUS any value previously accrued.
Tim and Moby discuss interest
Simple Interest vs Compound Interest
At the same rates of interest, compound interest will always be the better choice. Even if the interest rate on the simple interest is higher, an account using compound interest will eventually surpass it but this may take a long time. Be sure to investigate both and see which will best suit your needs.
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