What is compound interest?

  • Earned interest is defined as the amount of money earned over a specific period from investments that pay you a regular mandated payment series.
  • Simple interest is interest calculated only on the principal amount.
  • Compound interest is interest calculated on the principal amount and the interest it accrues.
  • Interest can compound at various frequencies or periods with compound interest. The frequency could be yearly, every six months, quarterly, monthly, weekly, or daily.