How Much Does It Cost to Borrow? Use This Example. Let’s say you’re comparing two $10,000 loans for 3 years at 5% interest: Even with the same interest rate, how it’s calculated affects how ...

Compounding is the process where an asset’s earnings, from either capital gains or interest, are reinvested to generate additional earnings for an investor.

Learn the difference between simple and compound interest, what happens when you open a bank account or take a loan, with a KS3 Maths guide from BBC Bitesize.

Simple vs. Compound Interest: An Overview . Interest is defined as the cost of borrowing money. It can also be the rate paid for money on deposit, as in the case of a certificate of deposit.