human
What is the difference between a'simple' and 'compound' interest?
assistant
Simple Interest is when you earn interest on your principal balance. Compound Interest is when you earn interest on both your principal balance and any interest already earned. For example, if you have $10,000 in a savings account earning 2% simple interest, after one year you would have $10,200 in your account because you would have earned interest on the original amount of money. However, if you had $10,000 in a savings account earning 2% compound interest, after one year you would have $11,976 in your account because you would have earned interest on the initial principal plus the interest already earned.