# Compound Interest

- Interest that accrues on the initial principal and the accumulated interest of a principal deposit, loan or debt. Compounding of interest allows a principal amount to grow at a faster rate than simple interest, which is calculated as a percentage of only the principal amount.

The more frequently interest is added to the principal, the faster the principal grows and the higher the compound interest will be. The frequency at which the interest is compounded is established at the initial stages of securing the loan. Generally, interest tends to be calculated on an annual basis, although other terms may be established at the time of the loan.

*Investment dictionary.
Academic.
2012.*

### Look at other dictionaries:

**compound interest**— see interest 5 Merriam Webster’s Dictionary of Law. Merriam Webster. 1996. compound interest … Law dictionary**compound interest**— Interest computed by applying the simple rate of interest to calculate interest on principal plus interest on successive increments of interest earned in prior periods. American Banker Glossary interest paid on previously earned interest as well… … Financial and business terms**Compound interest**— Interest paid on previously earned interest as well as on the principal. The New York Times Financial Glossary * * * compound interest compound interest ➔ interest * * * The interest amount earned on the original principal and on the… … Financial and business terms**Compound interest**— Compound Com pound, a. [OE. compouned, p. p. of compounen. See {Compound}, v. t.] Composed of two or more elements, ingredients, parts; produced by the union of several ingredients, parts, or things; composite; as, a compound word. [1913 Webster] … The Collaborative International Dictionary of English**Compound interest**— Interest In ter*est, n. [OF. interest, F. int[ e]r[^e]t, fr. L. interest it interests, is of interest, fr. interesse to be between, to be difference, to be importance; inter between + esse to be; cf. LL. interesse usury. See {Essence}.] [1913… … The Collaborative International Dictionary of English**compound interest**— n [U] ↑interest that is calculated on both the sum of money lent or borrowed and on the unpaid interest already earned or charged →↑simple interest … Dictionary of contemporary English**compound interest**— n. interest computed on the sum of the principal and the accrued interest: cf. SIMPLE INTEREST … English World dictionary**compound interest**— noun uncount interest that is based both on an amount of money that someone has borrowed or saved and on the interest that has been added to it … Usage of the words and phrases in modern English**Compound interest**— The effect of earning 20% annual interest on an initial $1,000 investment at various compounding frequencies Compound interest arises when interest is added to the principal, so that from that moment on, the interest that has been added also… … Wikipedia**compound interest**— noun interest calculated on both the principal and the accrued interest • Hypernyms: ↑interest * * * noun : interest paid or computed on the combined sum of the original principal of a loan and interest accrued and payable at the end of each… … Useful english dictionary