Why compounding can help savings and increase debt costs.
Compound interest is calculated on both principal and previously accumulated interest.
Reviewed July 19, 2026 · 1 minute read
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Compound interest is calculated on both principal and previously accumulated interest.
Compound interest is interest accumulated from a principal sum and previously accumulated interest. It is the result of reinvesting or retaining interest that would otherwise be paid out, or of the accumulation of debts from a borrower.
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