Definition
Compound interest
Compound interest is interest that is added to the balance and then earns interest itself. Over long periods the growth becomes a significant share of the total, and it accelerates rather than arriving in a straight line.
The same mechanism works against you on debt, where unpaid interest is added to the balance and starts charging interest of its own.
Tools that use this term
Compound Interest Calculator
What a starting amount plus regular deposits grows into, and how much of it is interest.
Savings Goal Calculator
How many months it takes to reach a savings target, with monthly deposits and interest.
Debt Payoff Calculator
When a balance reaches zero at your planned payment, and how much interest it costs.
Loan Calculator
The monthly payment on a loan, the total cost of borrowing and the interest it hides.
Mortgage Calculator
The real monthly cost of a mortgage: repayment, interest, taxes, insurance and total cost over the term.