Source: http://www.accountz.com/glossary.html#c Definition: Apply interest on the capital plus all interest accrued to date. Eg. A loan with an annually applied rate of 10% for 1000 over two years would yield a gross total of 1210 at the end of the period (year 1 interest=100, year two interest=110). The same loan with simple interest applied would yield 1200 (interest on both years is 100 per year). Source: http://www.ventureline.com/glossary_C.asp Definition: is interest calculated from the total of original principal plus accrued interest.