Simple interest can be used on loans and bonds. Loans that include simple interest include mortgages, credit cards, and student loans, to name a few. If you purchase bonds from the government or a corporation, you will receive simple interest. A savings account is an example of when simple interest is not used. Assuming you leave prior interest payments in the account, you will receive interest on the original value plus the prior interest payments. This is compounding interest. Simple interest is used when you pay back a loan because you only pay interest on the current value of the loan, not the previous interest that has accrued. Another example of simple interest is when you lend money to the government–you receive interest only on the original amount invested, and not on each previous interest payment you have received.