Elvis Picardo is a regular contributor to Investopedia and has 25+ years of experience as a portfolio manager with diverse capital markets experience. Suzanne is a content marketer, writer, and ...

Once a principal balance earns interest, that interest becomes a part of the principal and continues to earn more interest—that is the magic of compounding. What Is Compound Interest? How Does It Work ...

You might have heard people use the term compound interest, but if you can’t answer the question “What is compound interest?” then you’re missing out on how compound interest affects your finances.

Compound interest can help turbocharge your savings and investments, or it can quickly lead to an unruly balance, keeping you stuck in a cycle of debt. Its magic can help you earn more — or owe more.

Compound interest is a powerful force for consumers looking to build their savings. It creates a multiplier effect on your money that can help it grow more over time. Knowing how it works and how ...