Glossary definition What is compound interest?Compound interest Compound interest is a type of interest that is applied to the initial principle of a deposit or loan and to each subsequent accumulation of interest going forward. Commonly described as interest on interest, compounding interest ...
Compound interest is the interest paid on the original principalandon the accumulated pastinterest. When youborrow money from a bank, you pay interest. Interest is really a fee charged for borrowing the money, it is a percentage charged on the principal amount for a period of a year -- usua...
When a bank offers compound interest, it figures the interest for each period based on the account's previous balance plus the interest gained in the last period. Review simple interest, compare it to compound interest, and study compound interest's definition, formula, and examples. ...
Compound interest definition Compound interest is the money your bank pays you on your balance — known as interest — plus the money that interest earns over time. It’s a way to make your cash work for you. How quickly your money grows is determined by your savings rate, bank balance ...
The definition of compound interest In simple terms, the compound interest definition is the interest you earn on interest. With a savings account, money market account or CD that earns compound interest, you earn interest on the principal (the initial amount deposited) plus on the interest that...
Compound Interest Definition Compound interest is a means of calculating interest whereby the addition of interest over time is added to the principal sum. Not only do you earn interest on the principal sum, you also earn interest on your interest. This happens as a result of saving your inter...
What is compound interest? Compound interest is when interest you earn in a savings account or on certain types of investments (think: certificates of deposit or fixed annuities) earns interest of its own. In other words, you earn interest on both your initial balance—called the principal—and...
We can earn interest on the interest from the money we save.
Simple interest is interest gained on the money you deposit into your account. This is also known as the principle. Compound interest is interest earned not just on your principle but on the interest your principle has earned. Banks will offer savings accounts with interest rates that are based...
Definition and Examples of Compound Interest Compound interestis interest earned from the original principal plus accumulated interest. Not only are you earning interest on your beginning deposit, you're earning interest on the interest. Think about compound interest a bit like what happens when the ...