Compound interest is when interest grows every year. Say you owe the bank $1,000. The interest rate is 10%. After a year, you owe $1,100. Why? You still haven't paid this year's interest. So for the second year, you need to pay 10% of $1,100 in interest. This is used a lot in real life. There's also simple interest, where interest remains the "same". You pay 10% for $1,000 every year, and not of $1,100, $1,210, and so on.
Hope this helps! Have a great day :)
