Can someone please tell me the difference between ‘simple interest’ and ‘compound interest’?
Compound interest is the interest you’re charged on the amount of money you owe, along with any interest which hasn’t been already paid off from previous months. Basically, it’s interest charged on the loan and previous accumulated interest. You can read this article which explains thee concept fully: http://yallacompare.com/blog/compound-interest-made-simple-018338
In the case of savings, compound interest is a wonderful thing. Compound interest is when a bank pays interest on both the principal (the original amount of money) and the interest an account has already earned.
For example: Lets say you put AED100 in a savings account which pays you 10% compound interest at the end of every year. After one year you will have AED100 + 10% = AED110, and after two years you will have AED110 + 10% = AED121.