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.

How do you earn compound interest?

The more frequently interest compounds, the more room your money has to grow. The best way to earn compound interest is by saving or investing your money in a compound interest account or an account that earns compound interest. Examples of compound interest accounts include:

What is a compound interest account?

A compound interest account is any account that pays you interest on your principal and interest, and not simply on your original deposit. Such an account might be a savings account that you open at a bank or a brokerage account that you open with an online or full service broker.