interest paid on both the principal and on accrued interest.
Words nearby compound interest
Origin of compound interest
First recorded in 1650–60
Dictionary.com Unabridged Based on the Random House Unabridged Dictionary, © Random House, Inc. 2019
British Dictionary definitions for compound interest
interest calculated on both the principal and its accrued interestCompare simple interest
Collins English Dictionary - Complete & Unabridged 2012 Digital Edition © William Collins Sons & Co. Ltd. 1979, 1986 © HarperCollins Publishers 1998, 2000, 2003, 2005, 2006, 2007, 2009, 2012
Science definitions for compound interest
Interest computed on the original principal plus any accrued interest. Thus if 5% is the rate of interest per year and the principal is $1000, the compound amount after one year will be $1050, after two years it will be $1050 X 0.05 = $1102.50, after three years it will be $1102.50 X 0.05 = $1157.63, and so forth. Mathematically, if P is the original principal and I the rate of interest expressed as a decimal, the compound amount at the end of the nth year will be P(1 + I)n. The growth of the compound amount is exponential and not linear. Compare simple interest.
The American Heritage® Science Dictionary Copyright © 2011. Published by Houghton Mifflin Harcourt Publishing Company. All rights reserved.
Culture definitions for compound interest
The New Dictionary of Cultural Literacy, Third Edition Copyright © 2005 by Houghton Mifflin Harcourt Publishing Company. Published by Houghton Mifflin Harcourt Publishing Company. All rights reserved.