Aye, matey! Compound interest is when yer earnings grow not just on the gold ye stashed, but also on past plunder. Unlike simple interest, which sticks to the original stash, compound interest makes yer piastres swell faster over time!

That is: Compound interest is calculated on the initial principal and also on the accumulated interest of previous periods of a deposit or a loan. It differs from simple interest, which is calculated only on the principal amount.