When you borrow money from a bank, you pay interest. Interest is really a fee charged for borrowing the money, it is a percentage charged on the principle amount for a period of a year - usually.
If you want to know how much interest you will earn on your investment or if you want to know how much you will pay above the cost of the principal amount on a loan or mortgage, you will need to understand how compound interest works.
* Compound interest is paid on the original principal and on the accumulated past interest.
If you want to know how much interest you will earn on your investment or if you want to know how much you will pay above the cost of the principal amount on a loan or mortgage, you will need to understand how compound interest works.
* Compound interest is paid on the original principal and on the accumulated past interest.
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