You might have heard people use the term compound interest, but if you can’t answer the question “What is compound interest?” then you’re missing out on how compound interest affects your finances.

Greg DePersio has 13+ years of professional experience in sales and SEO and 3+ years as a writer and editor. Simple interest is calculated only on the principal balance of the loan each period.

What these two processes share is baked into the math of each. In fact, in that respect, they're nearly identical. They both involve some stuff (atoms or money) that is either growing or shrinking.

The world of finance can seem boring to many people, and it's true that the thought of accounting rules, tax laws, valuation formulas, and inventory management systems might put you to sleep. But ...

Compound interest can help turbocharge your savings and investments, or it can quickly lead to an unruly balance, keeping you stuck in a cycle of debt. Its magic can help you earn more — or owe more.

Interest is the amount of money you must pay to borrow money in addition to the loan's principal. It's also the amount you are paid over time when you deposit money in a savings account or certificate ...

Interest can be charged when you borrow money or earned when you save. When you charge something on a credit card or take out ...

Compound interest grows by reinvesting earnings, creating larger interest over time. Increasing compounding frequency (e.g., monthly) can significantly accelerate investment growth. Compound earnings ...

Earning interest remains one of the cornerstones of investing and lets you earn passive income by putting your money into interest-bearing securities or accounts. Compound interest allows you to ...

See how your savings and investment account balances can grow with the magic of compound interest. Many, or all, of the products featured on this page are from our advertising partners who compensate ...

Compound interest is commonly described as "interest earned on interest." Compound interest can work to your advantage as your investments grow over time, but against you if you're paying off debt, ...