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In 2 to 4 sentences, describe why compound interest earns more money than simple interest.

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Simple interest is set in place by an interest rate that is multiplied by the total amount of money you have in place. While compound interest is essentially interest on top of your simple interest. It accumulates over time making you more money.


User Sevle
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First up, it is possible to say that compound interest earns more money that simple interest if we are taking the moneylender position, other case is a loss for the payer.

It is possible to say that compound interest earns more money because for taking into account the amound of money to be paid the future interests are added to the original debt. So that, the interests are paid not only over the original amount of money that was asked, but also are they over the interests that this money is going to generate in certain period of time.

In contrast, in simple interest, these are paid only over the original amount of money, without taking in consideration future debts.

User Yamira
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