The best answer is A. Interest is a fee paid for the use of another party's money. To the borrower it is the cost of renting money, to the lender it is the income from lending it. There are two kinds of interest. Simple interest or nominated interest is money earned from the money that has been deposited in an account, but not on the money the account earns. Compound interest is money earned from the money that was originally put into an account (principal) plus the money that the interest earns. The interest also earns interest too. The interest earned on the principal is regularly added to the balance.