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compound interest
Sign in to savewhen interest is added to the principal of a deposit or loan, so that, from that moment on, the interest that has been added also earns interest
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Encyclopedic overview
Effective interest rates The effect of earning 20% annual interest on an initial $1,000 investment and various compounding frequencies
Compound interest is interest accumulated from a principal sum and previously accumulated interest. It is the result of reinvesting or retaining interest that would otherwise be paid out, or of the accumulation of debts from a borrower.
Excerpted from Wikipedia’s “compound interest” article, available under the CC BY-SA 4.0 licence.