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Compound interest
(redirected from Compounding of interest)

    Also found in: Financial, Wikipedia, Hutchinson 0.04 sec.

Interest generated by the sum of the principal and any accrued interest.

Interest is normally compounded on a daily, quarterly, or yearly basis. The more often interest is compounded, the larger the principal will grow and the greater the interest the new principal will produce.

compound interest n. payment of interest upon principal and previously accumulated interest which increases the amount paid for money use above just simple interest. Thus, it can increase more rapidly if compounded daily, monthly or quarterly. The genius physicist Albert Einstein called compound interest man's "greatest invention." Most lenders agree. (See: interest, promissory note)

COMPOUND INTEREST. Interest allowed upon interest; for example, when a sum of money due for interest, is added to the principal, and then bears interest. This is not, in general, allowed. See Interest for money.
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? References in periodicals archive
For example, the extra taxes from rising tax rates may be offset by a larger amount of accumulated funds in an IRA due to tax-deferred compounding of interest at a higher rate of return.
Should taxable income be sheltered? A look at an IRA by Green, Tracy Wilson / Journal of Accountancy
nbsp;on the bank loan as well as the compounding of interest on the Zero Coupon Convertible Subordinated Notes.
Cellular Communications announces operating results for 1995 by Business Wire
added section 6622 to the Code, which requires the daily compounding of interest on all amounts accruing after December 31, 1982.
Interest on federal tax deficiencies and overpayments by Heffernan, James V. / Tax Executive
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