What is confound interest?

Answer 1

Until relatively recently, all money lenders were in the business of confounding their customers as to the true cost of borrowing money from them. This was because many people would have had serious doubts if they knew the total cost of borrowing, and the lenders would then lose business and their livelihood.

Around 40-50 years ago many governments, across the world, insisted that formal financial institutions were up front about their interest rates and confounding was significantly reduced. However, it continued, as before, in the unregulated sector - the loan sharks, for example. Often, interest over a short period was highlighted to conceal the annual rate. For example, 5% per week does not sound like much but it is more than 1000% over a year. So if you borrow GBP 100, you will have to pay back more than GBP 1100 a year later! The 5% was quoted to confoud, astound, nonplus you!

But, just in case you meant compound interest, this is interest that is charged not just on the capital but also on any interest accumulated from previous periods.

Answer 2

Compound interest refers to the concept of earning interest not only on the initial amount of money invested, but also on any interest that has been previously earned. This means that as time goes on, the interest earned can add up and grow exponentially. As a result, compound interest can be a powerful tool for increasing wealth over time.