Compound interest is the numerical value that is calculated on the initial principal and the accumulated interest of previous periods of a deposit or loan. Compound interest is common on loans but is less often used with deposit accounts.
![Logo](https://media.sailthru.com/53o/1k3/2/4/5c58cb7fcf63e.png) | Term of the Day | Words to Know | | | ![](https://media.sailthru.com/53q/1k2/5/h/5afdc887e2c1f.gif) | Compound Interest | Compound interest (or compounding interest) is interest calculated on the initial principal, which also includes all of the accumulated interest of previous periods of a deposit or loan. Thought to have originated in 17th century Italy, compound interest can be thought of as "interest on interest," and will make a sum grow at a faster rate than simple interest, which is calculated only on the principal amount. | Read More » | Related to "Compound Interest" | | Continuous Compounding | Continuous compounding is the process of calculating interest and reinvesting it into an account's balance over a theoretically infinite number of periods. | Read More » | | | | | CONNECT WITH INVESTOPEDIA | | | | | |
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