Compound interest is interest accruing on the principal and previously applied interest. The effect of compound interest depends on how frequently it is applied.

If compounded quarterly, it would increase to about $2,007.04. This example highlights the significant impact that both the interest rate and compounding frequency have on your investment growth.

We show you how to calculate compound interest in Excel at different rate of interests, like semi-annually, quarterly, monthly, etc.

How does compound interest work with CDs? There are two kinds of interest you can earn on a deposit account: simple and compound interest.