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compound interest

   Also found in: Dictionary/thesaurus, Legal, Wikipedia, Hutchinson 0.06 sec.
Compound interest
Interest paid on previously earned interest as well as on the principal.
compound interest
Interest paid both on principal and on interest earned during previous compounding periods. Essentially, compounding involves adding interest to the sum of principal and any previous interest in order to calculate interest in the next period. Compare simple interest. See also frequency of compounding.
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