# compound interest

compound interest interest computed on the sum of the principal and the accrued interest

## compound interest

noun

Interest computed on the accumulated unpaid interest as well as on the original principal.

## compound-interest

Noun

(*usually uncountable*, *plural* compound interests)

- (banking, finance) Interest, as on a loan or a bank account, that is calculated on the total on the principal plus accumulated unpaid interest.

## compound interest - Investment & Finance Definition

Interest that is calculated not only on the principal of the investment or loan (the original amount invested or borrowed), but also on the interest accrued when periodic repayment is received. Compound interest causes the interest that is earned or paid to be higher than interest calculated under the simple interest method. Simple interest pays interest only on the initial principal amount of the investment or loan.

## compound interest - Legal Definition

See interest.