{"id":1660,"date":"2018-01-05T09:59:00","date_gmt":"2018-01-05T14:59:00","guid":{"rendered":"https:\/\/sagestaging.wpengine.com\/en-us\/blog\/?post_type=sage_glossary&#038;p=1660"},"modified":"2026-01-16T08:23:49","modified_gmt":"2026-01-16T13:23:49","slug":"what-is-compound-interest","status":"publish","type":"sage_glossary","link":"https:\/\/www.sage.com\/en-ca\/blog\/glossary\/what-is-compound-interest\/","title":{"rendered":"What is compound interest?"},"content":{"rendered":"<header class=\"entry-header has-dark-background-color entry-header--has-illustration entry-header--has-illustration--generic\">\n\t<div class=\"container\">\n\t\t<div class=\"entry-header__row row align-center\">\n\t\t\t<div class=\"col col-lg-7 col-xlg-6 entry-header__content\">\n\t\t\t\t\t\t\t<div class=\"component component-single-header\">\n\t\t\t\t\t\t\t\t\t\t<div class=\"entry-header__misc text--subtitle text--uppercase text--small\">\n\t\t\t\t\t\t\t<a href=\"https:\/\/www.sage.com\/en-ca\/blog\/glossary\/\" class=\"entry-header__link\">Glossary definition<\/a>\t\t\t\t\t\t<\/div>\n\t\t\t\t\n\t\t\t\t<div class=\"entry-title-wrapper\">\n\t\t\t\t\t<h1 class=\"entry-title\">\n\t\t\t\t\t\tWhat is compound interest?\t\t\t\t\t<\/h1>\n\t\t\t\t<\/div>\n\n\t\t\t\t\n\t\t\t\t\n\t\t\t\t\n\t\t\t<\/div>\n\n\t\t\t\t\t<\/div>\n\t\t\t\t\t<\/div>\n\t<\/div>\n\t\t<div class=\"single-post-details container\">\n\t\t<div class=\"col\">\n\t\t\t<span class=\"reading-time\"> min read<\/span>\n\t\t<button\n\t\t\ttype=\"button\"\n\t\t\tclass=\"social-share-button button button--icon button--secondary js-social-share-button\"\n\t\t\tdata-share-title=\"What is compound interest?\"\n\t\t\tdata-share-url=\"https:\/\/www.sage.com\/en-ca\/blog\/glossary\/what-is-compound-interest\/\"\n\t\t\tdata-share-text=\"Please read this interesting article\"\n\t\t>\n\t\t\t<span class=\"social-share-button__share-label\">Share<\/span>\n\t\t\t<span class=\"social-share-button__copy-label\" hidden>Copy Link<\/span>\n\t\t\t<span class=\"social-share-button__copy-tooltip\" aria-hidden=\"true\" hidden>Copied<\/span>\n\t\t<\/button>\n\n\t\t\t\t<\/div>\n\t<\/div>\n\t<\/header>\n\n\n\n\n\n<p class=\"wp-block-paragraph\">&nbsp;<\/p>\n\n\n\n<h2 class=\"wp-block-heading\" id=\"h-compound-interest\">Compound interest<\/h2>\n\n\n\n<p class=\"wp-block-paragraph\">Compound interest is a type of interest that is applied to the initial principle of a deposit or loan and to each subsequent accumulation of interest going forward. Commonly described as interest on interest, compounding interest increases at the rate of a predetermined frequency of compounding. With each period, interest is applied on top of the initial principal plus the interest accrued thus far on the initial principal.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\"><a href=\"https:\/\/www.sage.com\/en-ca\/products\/\">Calculate compound interest<\/a> with this formula:<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">Compound Interest = Principle x [1 + (Interest Rate\/Compounding Frequency)] (Compounding Frequency x Number of Periods)<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">What does compound interest mean for your investment or loan? The party collecting the interest benefits more from applying compound interest. Collecting on a compound interest deposit will yield increasingly more interest with each period. When paying a loan with compound interest, the level of debt increases exponentially with each compounding period.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">The compound interest definition contrasts with that of simple interest, in that simple interest is applied solely to the initial principal over each period.<\/p>\n","protected":false},"excerpt":{"rendered":"<p>&nbsp; Compound interest Compound interest is a type of interest that is applied to the initial principle of a deposit or loan and to each subsequent accumulation of interest going forward. Commonly described as interest on interest, compounding interest increases at the rate of a predetermined frequency of compounding. With each period, interest is applied [&hellip;]<\/p>\n","protected":false},"author":102,"featured_media":0,"template":"","meta":{"_sage_video":false,"footnotes":""},"tags":[],"class_list":["post-1660","sage_glossary","type-sage_glossary","status-publish","hentry"],"distributor_meta":false,"distributor_terms":false,"distributor_media":false,"distributor_original_site_name":"Sage Advice Canada English","distributor_original_site_url":"https:\/\/www.sage.com\/en-ca\/blog","push-errors":false,"_links":{"self":[{"href":"https:\/\/www.sage.com\/en-ca\/blog\/api\/wp\/v2\/sage_glossary\/1660","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.sage.com\/en-ca\/blog\/api\/wp\/v2\/sage_glossary"}],"about":[{"href":"https:\/\/www.sage.com\/en-ca\/blog\/api\/wp\/v2\/types\/sage_glossary"}],"author":[{"embeddable":true,"href":"https:\/\/www.sage.com\/en-ca\/blog\/api\/wp\/v2\/users\/102"}],"version-history":[{"count":0,"href":"https:\/\/www.sage.com\/en-ca\/blog\/api\/wp\/v2\/sage_glossary\/1660\/revisions"}],"wp:attachment":[{"href":"https:\/\/www.sage.com\/en-ca\/blog\/api\/wp\/v2\/media?parent=1660"}],"wp:term":[{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.sage.com\/en-ca\/blog\/api\/wp\/v2\/tags?post=1660"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}