What is a compound interest savings account?

Images by Tang Ming Tung / Getty images A compound-interest savings account earns interest on the principal balance and accumulated interest, allowing you to grow your savings more quickly than if you’re only earning interest on the principal.

How to open a compound interest account?

Here’s how to open a compound interest account and what you should research before signing up. A compound interest account is any account that lets you earn interest or some other return to grow your savings. You could open a compound interest account with a bank, or you could also open a compound interest account with an investment broker.

How is interest compounded?

Here are the four most common ways interest is compounded: Daily compounding. This is the quickest way to grow your money because interest is added to your account balance every day. Most savings accounts compound interest daily and post earnings to your account monthly. Monthly compounding. Interest is calculated on your account once per month.