What does Compound Interest mean?

Here's a list of possible definitions for the term Compound Interest:

Princeton's WordNet

  1. compound interest(noun)

    interest calculated on both the principal and the accrued interest


  1. compound interest(Noun)

    Interest, as on a loan or a bank account, that is calculated on the total on the principal plus accumulated unpaid interest.


  1. Compound interest

    Compound interest arises when interest is added to the principal, so that, from that moment on, the interest that has been added also earns interest. This addition of interest to the principal is called compounding. A bank account, for example, may have its interest compounded every year: in this case, an account with $1000 initial principal and 20% interest per year would have a balance of $1200 at the end of the first year, $1440 at the end of the second year, and so on. In order to define an interest rate fully, and enable one to compare it with other interest rates, the interest rate and the compounding frequency must be disclosed. Since most people prefer to think of rates as a yearly percentage, many governments require financial institutions to disclose the equivalent yearly compounded interest rate on deposits or advances. For instance, the yearly rate for a loan with 1% interest per month is approximately 12.68% per annum. This equivalent yearly rate may be referred to as annual percentage rate, annual equivalent rate, effective interest rate, effective annual rate, and by other terms. When a fee is charged up front to obtain a loan, APR usually counts that cost as well as the compound interest in converting to the equivalent rate. These government requirements assist consumers to compare the actual costs of borrowing more easily.

How to pronounce Compound Interest?

  1. Alex
    US English

How to say Compound Interest in sign language?

  1. compoundinterest


  1. Chaldean Numerology

    The numerical value of Compound Interest in Chaldean Numerology is: 1

  2. Pythagorean Numerology

    The numerical value of Compound Interest in Pythagorean Numerology is: 4

Examples of Compound Interest in a Sentence

  1. Mignon McLaughlin:

    Albert Einstein when asked what he considered to be the most powerful force in the universe answered: Compound interest! What you have become is the price you paid to get what you used to want.

Images & Illustrations of Compound Interest

  1. Compound InterestCompound InterestCompound InterestCompound InterestCompound Interest

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