When you borrow money, you’ll also pay interest on top of the amount you borrowed.. Interest is the money the lender gets for loaning you the money. Read Next: 5 Subtly Genius Moves All Wealthy People ...

Simple interest vs. compound interest Simple interest refers to the interest you earn on your principal balance only. Let's say you invest $10,000 into an account that pays 3% in simple interest.

Experts at Carleton acknowledged calculating add-on interest isn’t as prevalent as it once was with finance companies and other lenders using simple-interest calculations more often nowadays. However, ...