If an account pays what’s called simple interest, that means you only earn interest on the principal, that is, the amount of money you originally deposited.
If account pays compound interest, that means the financial institution will pay you interest not only on your original deposit but also on the interest your deposit has earned over time. With compound interest, your money grows more – and a lot faster!
The rate of return on an investment, such as a deposit in an interest-bearing savings account, for a one year period.
Yes. The interest you earn in your bank accounts is considered income, so it is taxable. The bank will send you a form at the end of the year that shows the total amount of interest you earned.