Compound Interest

What Does Compound Interest Mean?
Interest that accrues on the initial principal and the accumulated interest of a principal deposit, loan or debt. Compounding of interest allows a principal amount to grow at a faster rate than simple interest, which is calculated as a percentage of only the principal amount.

Investopedia explains Compound Interest
The more frequently interest is added to the principal, the faster the principal grows and the higher the compound interest will be. The frequency at which the interest is compounded is established at the initial stages of securing the loan. Generally, interest tends to be calculated on an annual basis, although other terms may be established at the time of the loan.

Related Terms

Anticipated Balance
Anticipated Interest
Compound
Compound Annual Growth Rate - CAGR
Compound Return
Cumulative Interest
Interest
Interest Expense
Interest Rate
Rule Of 72
More Related Terms

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