How is compound interest different from simple interest?

a
Compound interest is when interest is paid on the principal amount only. Simple interest is when interest is paid on the principal amount and on the interest already earned.
b
The money earned from simple interest can only be accessed after 1 year, while you can access the money earned from compound interest at any time.
c
The money earned from compound interest is placed into a separate account, while the money earned from simple interest stays within the same account.
d
Simple interest is when interest is paid on the principal amount only. Compound interest is when interest is paid on the principal amount and on the interest already earned.

Simple interest is when interest is paid on the principal amount only. Compound interest is when interest is paid on the principal amount and on the interest already earned.

Explanation:

Compounding interest refers to adding the interest earned to the principal amount at the end of a financial period. The interest gained becomes part of the principal amount for the following financial period. It means the principal amount increases every year, which results in increased interest earnings.

Simple interest is the interest earned from the principal amount only. If no more deposits are made, then the principal amount will remain the same, and the interest earned will be constant.