Which term refers to the original amount of money saved or invested, excluding interest?

Which term refers to the original amount of money saved or invested, excluding interest?

• A. Simple Interest
• B. Transaction Fee
• C. Overdraft Fee
• D. Principal

Answer: (D)

The original amount of money saved or invested, before any interest is added, is called the principal. This is the base figure on which interest is calculated, so if you start with $1,000, that $1,000 is the principal. Interest then earns on that base amount (and may grow if you leave the money invested). The other terms describe different ideas: simple interest is a way of calculating interest on the principal, not the original amount itself; a transaction fee is a charge for processing a transaction; an overdraft fee is charged when you spend more than you have available.

The original amount of money saved or invested, before any interest is added, is called the principal. This is the base figure on which interest is calculated, so if you start with $1,000, that $1,000 is the principal. Interest then earns on that base amount (and may grow if you leave the money invested). The other terms describe different ideas: simple interest is a way of calculating interest on the principal, not the original amount itself; a transaction fee is a charge for processing a transaction; an overdraft fee is charged when you spend more than you have available.