What is Compound Interest?

Compound interest is the interest paid on the original amount you pay into an account, together with the interest paid on the interest that has already accumulated on that original amount. It can also be thought of as ‘interest paid on interest’.

Compound interest makes sums of money grow at a faster rate than simple interest, which is interest calculated only on the original amount.

Related terms
What is an Accrual Rate
What is Decumulation
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