We were expecting that we kept the interest when we received it while dealing with simple interest. In a typical bank account, any interest that is earned is automatically added to the account's balance, where it is compounded annually. Compounding is the name for this process of reinvested interest.
In essence, exponential growth is produced by interest on interest. When interest on an investment compounds, your initial investment might rise more quickly, which is fantastic. However, it's not so fantastic when compound interest is applied to a loan or credit card debt because you now owe more money.
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