What does Compound Interest mean?

Definitions for Compound Interest
Com·pound In·ter·est

Here are all the possible meanings and translations of the word Compound Interest.

Princeton's WordNet

  1. interest calculated on both the principal and the accrued interest


  1. 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 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.

Matched Categories


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

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

Examples of Compound Interest in a Sentence

  1. 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.

  2. It's an excellent opportunity to teach your teen about the magic of compound interest.

  3. Read 500 pages every day. That’s how knowledge works. It builds up, like compound interest. All of you can do it, but I guarantee not many of you will do it.”

  4. Good and evil both increase at compound interest. That is why the little decisions you and I make every day are of such infinite importance.

Images & Illustrations of Compound Interest

Translations for Compound Interest

From our Multilingual Translation Dictionary

Get even more translations for Compound Interest »