Compound interest allows earnings on total account balance, not just contributions, significantly increasing savings over time. Comparatively, simple interest is calculated only on the principal amount.
Compound interest is calculated on the principal plus the accumulated interest, allowing you to earn interest on your total account balance, not just your contributions. It can significantly boost your savings over time by accumulating interest on interest.
Simple interest, on the other hand, is calculated only on the principal amount. While simple interest is easy to compute, compound interest has the potential to earn more money over time by leveraging the power of compounding.
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