The type of interest that is based on the principal amount and accumulated interest is compound interest.
The type of interest that is based on the principal amount and accumulated interest is compound interest. Compound interest is calculated by adding the interest earned to the principal amount and then calculating interest on the new total. This means that over time, interest is earned not only on the initial principal but also on the previously accumulated interest. This can result in significant growth of the investment or loan balance over time.
