Interest is the cost of borrowing money or the rate paid on a deposit. Learn the difference between simple and compound interest, plus how it impacts your finances.

When you borrow money, you’ll also pay interest on top of the amount you borrowed.. Interest is the money the lender gets for loaning you the money. Read Next: 5 Subtly Genius Moves All Wealthy People ...

The formula for calculating simple interest is A = P x R x T. Here's how the simple interest formula looks if the initial deposit is $1,000, the annual interest rate is 4% and the number of years is ...