Compound Interest Rate


Also found in: Dictionary, Thesaurus, Medical, Legal, Encyclopedia.
Related to Compound Interest Rate: Simple Interest Rate

Compound Interest Rate

The interest rate on a loan or other fixed-income instrument in which interest previously paid is included in the calculation of future interest. For example, if one has a certificate of deposit for $1,000 with a 3% compound interest rate (compounded monthly), the interest paid is $30 (3% of $1,000) in the first month, $30.90 (3% of $1,030) in the second month, and so forth. The more frequently interest is compounded, the higher the yield will be on the instrument.
References in periodicals archive ?
It emerged last year a compound interest rate of 4%, stipulated in the declaration signed by Mr Butler when he applied for the payment, had been waived by the Houses of the Oireachtas.
Charm Savings Bank based in Daegu has sold fixed-term deposit accounts with a 33 percent compound interest rate.
The third auction was for a semi-annual 10-year fixed bond which was sold at a 10.34% compound interest rate.